For central bank digital currencies (CBDCs), pilots, pilots everywhere — and some actual launches, too.
It’s no surprise that central banks, increasingly, have been following China’s progress in debuting a digital yuan and have been pivoting toward launching CBDCs of their own. We’re seeing a flurry of activity in the first few weeks of the new year from the private sector too.
A roundup of some of the latest developments follows:
Switzerland: On Thursday (Jan 13), news came that Switzerland’s central bank has conducted a successful test of digital currency used in wholesale transactions. The Swiss National Bank, as reported by Reuters, said that it had worked in collaboration with the Bank for International Settlements (BIS), SIX, the Swiss stock exchange and several banks including UBS, Credit Suisse, Goldman Sachs and Citi, among others.
The project is known as Helvetia, and in terms of the mechanics, the digital currency was used for simulated transactions between the FIs, where the transactions were settled instantly, and eliminated counterparty risk.
China: In further signs of China’s CBDC progress, as noted in this space, Tencent Holdings’ WeChat, one of the biggest messaging apps in the country, said it will begin accepting digital yuan payments through WeChat Pay, its digital wallet. As many as 1.4 billion people use WeChat and Alipay digital wallets to send and receive mobile payments. The central bank has already released its digital yuan wallet on the Google and Apple app stores within China.
Read also: Chinese Payments Giant WeChat to Accept Digital Yuan
Mexico: Just days into the new year, the Bank of Mexico stated that it wants to have its own digital currency circulating sometime in the next two years, in an effort to foster financial inclusion.
The president of Mexico’s central bank, Andrés Manuel López Obrador, said on Twitter it is important “to use these new technologies and latest-generation payments infrastructure as valuable options to advance financial inclusion in the country.” Cash is a mainstay of the informal economy, which makes up roughly a fifth of the country’s GDP.
Read more: Bank of Mexico Aims for 2024 CBDC Launch
The United States, we note, has been seen as something of a perpetual laggard in the CBDC space. The long-anticipated report from the U.S. Federal Reserve on the feasibility of a CBDC (and what it will take to get there) may be on the horizon. Federal Reserve Chairman Jerome Powell said that report will drop sometime in “in the coming weeks.” That comes about a year after Powell said that a digital dollar remains a “high priority.”
See also: A Year Later, Fed Chair Again Promises Crypto, CBDC Report ‘Soon’
India, for its part, was also in the news this week regarding CBDCs. The country’s central bank has said it will establish a FinTech department that will in part develop regulations for the release of its upcoming central bank digital currency (CBDC)
The Private Sector, Too
Private companies are boosting their own efforts to create and trial digital currencies as the new year dawns.
In addition to the aforementioned banks that worked with the Swiss central bank, as reported Thursday (Jan. 13), Visa said it is collaborating with blockchain software company ConsenSys to launch a central bank digital currency pilot program to test retail applications like cards and wallets. Visa has thus followed Mastercard’s 2020 of a CBDC test platform that enabled banks to simulate the issuance, distribution and exchange of CBDCs between banks, financial service providers.
Read also: Visa Teams with ConsenSys for Central Bank Digital Currency Pilot
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