Economic and political principles for introducing the Central Bank Digital Currency or CDBC can vary based on administration. So, what factors have caused a number of countries to start extensive research on Central Bank Digital Currency (CBDC)? The answer is alleviating cash usage, an unexpected worldwide Covid-19 pandemic, and the goal of maintaining the pace with other central banks.
Countries that are planning to implement the Blockchain Technology in their Currency
Are you excited to know about the curated list of Central Banks that have introduced or have been going through the development phase, or have been experiencing the ongoing research of their CBDC in terms of blockchain?
Let us start discussing the crucial information below:
Countries Undergoing the Pilot Experiment:
Firstly, we are going to check out the countries that have been undergoing the pilot experiment to ensure the feasibility of the blockchain technology for their currency:
The South African Reserve Bank or SARB teamed up with seven commercial banks in 2018 to develop “Project Khoka” by leveraging Quorum. In short, Project Khoka was conceived as a blockchain-based interbank system to carry out the day-to-day loads of payments by maintaining stringent security and irreversibility within record time.
Project Khoka was a success that marked an excellent achievement for the South African Reserve Bank. The success inspired the SARB to move forward with phase two of Project Khoka. The goal of the phase two was to issue, clear, and resolve debentures on the Distributed Ledger Technology (DLT) by leveraging the power of tokenized money within an MVP (minimum viable product) to notify policy as well as regulatory reflections.
The other objective of phase two of Project Khoka is to make participants buy debt instruments with a wToken and a wCBDC. And wToken is considered a stablecoin (privately issued) to streamline interbank settlements. (wToken stands for wholesale digital settlement token, and wCBDC stands for wholesale CBDC).
Did you know the Monetary Authority of Singapore (MAS) declare “Project Ubin” in the year 2016? Teamed up with ConsenSys, the main goal of this project is to clear and sort out securities and payments by leveraging the power of blockchain technology.
The good news is that already five phases have been completed after the beginning of the project throughout the course of 2020. Next, the MAS teamed up with various industry partners to reach its goal of exploring the progress of blockchain-based settlement methodologies. It results in the prototype development for digital multi-currency settlement that belongs to Phase 5.
Countries Undergoing the Development Phase:
Next, we are going to discuss the countries that are going through the development phase in this context:
Caribbean Countries, including Grenada, Barbuda, St. Vincent & Grenadines, Saint Kitts and Nevis, Antigua, Dominica, and St. Lucia:
The Eastern Caribbean Central Bank already performed the pilot experiment for a blockchain-issued CBDC at the beginning of 2019. The goal was to materialize a robust payment system and expanded financial inclusion among all individuals within the Eastern Caribbean Currency Union. The DXCD stablecoin comes as 1:1 with the formal banknotes of the region. Moreover, DXCD would also contribute to streamlining different financial transactions. It includes peer-to-peer transactions (for instance, sending and receiving money between individuals in the Eastern Caribbean Currency Union) and money transfers between merchants and consumers.
Countries Undergoing the Research Phase:
It is time to talk about the countries that are undergoing research to find the viability of the blockchain technology for their currency:
Are you a Canadian citizen with an interest in the latest finance news? Yes? Then, you might have heard about “Project Jasper.” The Bank of Canada wrapped up the fourth phase of the aforementioned project in February 2020. Note that Project Jasper came up as a noteworthy benchmark in the world of payments.
Having started the journey in 2017, Project Jasper was about the first experimentation of blockchain in terms of the collaboration between the private sector and a central bank. The fourth phase of the project witnessed the partnership between the Bank of Canada, the Bank of England, and the Monetary Authority of Singapore. The objective of this collaboration is to implement a cross-currency, cross-border settlement system.
In addition, the Bank of Canada is also devising a contingency strategy to introduce CBDC to develop a condition of operational preparedness and sustainable policy. Although the Bank of Canada had no definite plans to introduce a CBDC in the year 2019, the year 2021 witnessed the determination of the Bank to speed up the progress of a CBDC.
The administrators of Kazakhstan declared the digital currency development strategy of the country in May 2020. The said plan was a segment of a government strategy of the nation to come up as a base for the global block reward mining industry.
However, the Kazakh government also suggested the idea to leverage the power of blockchain technology along with the digital tenge. The objective in this context was to fight against corruption and make sure of transparency when it comes to distributing state budget funds.
The good news is that Kazakhstan has recently come up with an outline to develop blockchain as well as digital technology. The Central Bank of Kazakhstan is currently showing the viability of launching the CBDC tenge.
Did you know the Central Bank of Chile is currently discovering blockchain-based bonds? The country is witnessing the ongoing process of the proof-of-concept by the Central Bank of Chile. The report is projected to get introduced in November.
The Central Bank of Tunisia announced that the entity is currently undergoing the phase of research and consideration to know more about a CBDC.
The Bank of Lithuania declared the information of introducing LBCOIN, which was the first digital collector’s coin based on blockchain technology in the year 2018. It was a result of the more extensive research on CBDC. Nonetheless, the Bank of Lithuania started implementing a pilot experiment in 2020. As a result, the organization launched a whopping 24,000 digital LBCOINs. Upon the purchase of LBCOINs, users would obtain a collection of six digital tokens. As a result, the users can exchange these tokens to receive a physical silver collector coin.
\We hope the information was insightful for you to understand the contribution of blockchain technology to the digitization of currency in various countries.