Study Reveals Global Progress Towards Digital Currencies with US Falling Behind

A recent study revealed that 134 countries, representing 98% of the global economy, are currently exploring digital versions of their currencies. Over half of these countries are in advanced development, pilot, or launch stages, indicating a significant global interest in digital currencies.

The research, conducted by the U.S.-based Atlantic Council think tank, noted that all G20 countries, with the exception of Argentina, are progressing in their digital currency initiatives. However, the United States is falling behind, particularly in the development of a digital dollar for the general population.

While the U.S. continues to work on a banks-only “wholesale” digital dollar, progress on a digital currency for broader use has stalled. Federal Reserve chief Jerome Powell stated that such a currency is not imminent. President Joe Biden has ordered officials to investigate a digital dollar, but it has become a divisive political issue, with Biden’s opponent, Donald Trump, expressing opposition.

According to the Atlantic Council’s Josh Lipsky, the divergence between major central banks on Central Bank Digital Currency (CBDC) development is widening. China, Europe, and Japan are significantly ahead in this area, potentially impacting international payment systems and global financial dynamics.

Supporters of digital currencies believe they offer new functionalities and an alternative to physical cash. However, concerns over government surveillance have led to protests in several countries. The report also warned of a more fractured international payment system and potential loss of global financial influence for the U.S. if it falls behind in CBDC development.

Currently, there are 36 pilot projects in progress, including China’s e-CNY trial involving 260 million people across 25 cities. In Europe, the European Central Bank (ECB) is six months into preparations for a digital euro. Several countries, such as the Bahamas, Jamaica, and Nigeria, have fully implemented digital currencies, while the Eastern Caribbean Currency Union recently experienced technical issues with its digital wallet system.

The study highlighted an increase in wholesale CBDC projects following geopolitical events like the Russia-Ukraine conflict and G7 sanctions. Cross-border projects, such as “mBridge,” are connecting multiple countries, with BRICS member states at advanced stages of development. The ECB’s pilot program may serve as a model for other major economies.

China remains at the forefront with its digital yuan pilot, tested in various scenarios. The timeline for a full launch of China’s e-CNY remains uncertain, potentially happening by 2025 or 2026.