60% of global digital currencies have entered the testing phase

Reference News reported on February 18 that according to a report by the Nikkei on February 17, central banks around the world have begun testing digital currencies. According to the latest statistics from the Bank for International Settlements (BIS), the proportion of central banks that have advanced digital currencies to the empirical stage has reached 62%, an increase of 20 percentage points from 42% a year ago. Emerging countries with low cash usage convenience have a positive attitude in this area.

It is said that countries led by China may introduce digital currency systems within three years, by which time 20% of the world's population will benefit from the technology. Although developed countries such as Japan, the United States, and Europe are also interested in conducting relevant experiments, they are generally cautious about the practical application of digital currency.

Digital currencies issued by central banks of various countries are collectively referred to as "CBDCs", which are highly anticipated because they facilitate settlement and reduce the cost of holding funds. A survey conducted by BIS on central banks of 65 countries in 2020 found that 86% of central banks focused on the advantages of digital currencies, and more than 30 central banks have advanced digital currencies to the empirical stage. Several other countries are conducting pilot projects to allow people to actually experience the convenience brought by digital currencies. The central banks participating in the survey cover 72% of the world's population and have a combined economic scale of 91% of the world.

The report noted that emerging countries are at the forefront of digital currency experiments. China has actually distributed "digital RMB" to citizens in multiple cities. In October 2020, China promulgated an amendment to the People's Bank of China Law, listing digital RMB as the national legal currency and giving legal recognition to digital currency.

According to reports, CBDCs have also begun to circulate in developing countries. The Bahamas and Cambodia began using digital currencies in October 2020. Due to the large number of islands in the Bahamas, cash needs to be transported by shipping to circulate in the domestic market, which leads to high cash circulation costs. The more countries with imperfect financial infrastructure such as bank branches and ATMs, the more the convenience of CBDCs can be highlighted, and their introduction will be more popular.

Sweden, a developed country, is implementing a pilot program for the digital currency "e-krona". Electronic payments are already quite popular in the country, with cash usage at only about 2%.

Tomoya Suzuki, an expert at Nippon Research Institute, said that digital currency was previously promoted mainly by the private sector, but now central banks of various countries are also vigorously promoting its development from the perspectives of information processing and the effectiveness of financial policies.

However, many developed countries are cautious about issuing digital currencies. Japan, the United States, and the Eurozone countries have not yet formulated plans to issue digital currencies. The reason is that it is not easy to take into account both convenience and security at the same time, and there are still many topics that need to be explored in depth at the technical and institutional design levels.

In October 2020, seven central banks including Japan, the United States, and Europe and the BIS jointly formulated the necessary basic principles for CBDC, stipulating that CBDC must not affect the stability of prices and the financial system, and must coexist with cash and private digital currencies.

File photo: On February 12, customers can use digital RMB to pay in a store on Wangfujing Street in Beijing. (Photo by Zhang Chenlin)

Content from Xinhua News Agency