• Tuesday, July 23, 2024
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Here are the top countries leading the race in digital currency- PwC

Here are the top countries leading the race in digital currency- PwC

Nigeria, Bahamas, China, Jamaica, Eastern Caribbean, Ukraine, Uruguay, Thailand, Sweden and the republic of Korea are the top 10 countries leading the race in digital currency (money), according to the 2022 Central Bank Digital Currency (CBDC) Global Index

The Index in its second edition, titled ‘The race to digital money’ by PricewaterhouseCoopers (PwC) stated that these countries led the retail project indexes of central banks globally in the Index. A digital currency is a means of payment or money that exists in a purely electronic form.

“Retail projects in the Index are led by the Central Bank of Nigeria’s (CBN) eNaira, the first CBDC in Africa, and the Sand Dollar, issued by the Central Bank of the Bahamas as legal tender in October 2020, making the Bahamas the first country to launch a CBDC,” the report stated.

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It adds, “China became the first major economy to pilot a CBDC in 2020 with the digital Yuan, and as of March 2022 pilot programs are running in 12 cities, including Beijing and Shanghai.”

The PwC index is designed to measure central banks’ level of maturity in deploying their own digital currency. It analyses and ranks the leading retail and wholesale CBDC projects and also evaluates the current stage of CBDC project development also taking into account central bank opinion and public interest.

Last year, the CBN launched its eNaira as a legal tender, making Nigeria the first African country to launch a CBDC. According to President Muhammed Buhari, a properly managed e-Naira could add more than $29 billion to Nigeria’s GDP over the next 10 years.

The aim of the digital currency is set to achieve the following such as promote and facilitate financial inclusion, enable direct welfare disbursements to citizens, facilitate diaspora remittances, reduce the cost of processing cash, improve the availability and usability of Central Bank money, increase revenue and tax collection, support a resilient payment system and improve the efficiency of cross-border payments.

Haydn Jones, the blockchain & crypto specialist at PwC UK said the success of Nigeria’s eNaira is likely to spur CBDC development in countries where financial inclusion is one of the key desired outcomes.

“Countries are at differing levels of maturity with CBDCs and each country has different motivating factors. Increasing financial inclusion, facilitating cross border payments and controlling financial crime are all factors that come into play. We expect CBDC research, testing and implementation will intensify in 2022,” Jones further said.

Likewise, Andrew Nevin, the chief economist at PwC Nigeria noted that CBDCs will transform the payment system, as low value-added transactions become possible in a costless and secure way for everyone.

“The success could also catalyse more complex and transformative CBDC uses, including blockchain identity management, land registry, and supply chain verification. As each of the use cases develops, we can bring more people into the economic and financial system and lift tens of millions out of poverty,” Nevin also added.

The report further highlighted that as at December 2021, about 666,000 eNaira speed wallets had been created followed by 700,000 speed wallet App downloads, more than 35, 000 total transactions, 90 percent of transactions are person to business and business to person and 160 countries downloaded the e-Naira speed wallet App.

“The digital currency is expected to support the country’s target to raise the level of financial inclusion from 64 percent to 95 percent. By making the E- Naira platform part of the financial ecosystem, the CBN hopes to grow new private sector use cases to support the uptake of the CBDC,” the report states.

On the wholesale side, the leading project in the index is the combined effort of the Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BoT) to launch the Bridge project, which focused on developing a proof-of-concept prototype to enable real-time, cross-border foreign exchange payments on distributed ledger technology.

Also ranked highly is the work of the Monetary Authority of Singapore (MAS), with two new CBDC projects were also highly ranked in the report as it continues the development of a wholesale CBDC for cross-currency payments.

The PwC report also provided an overview of stablecoins, and digital currencies collateralized by, for example, a fiat currency, which can allow a bridge to be created between the traditional financial ecosystem and digital technologies. “Over 80 per cent of Central Banks are considering launching CBDC.