About 80% of central banks are exploring use cases involving central bank digital currencies (CBDCs), with 40% already testing proof-of-concept programs, according to a new report by blockchain infrastructure platform Bison Trails.
The report by Bison Trails, a unit of crypto exchange Coinbase, examines digital currency proof-of-concepts launched by more than 11 countries and cities, including Hong Kong, Thailand, China, Australia, Singapore and Japan. The report also looks at the role of private digital currencies such as Diem.
CBDCs are moving toward global implementation, and the infrastructure of a digital currency is critical for a successful rollout, according to the report.
Facebook-backed cryptocurrency Diem, formerly known as Libra, is motivating many central banks to develop CBDCs, the report noted. Most recently, Diem formed a partnership with Silvergate Bank with plans to test the U.S. dollar-pegged stablecoin later this year.
“Diem offers a whole new paradigm in economics: a diverse association of enterprise and social impact stakeholders developing digital currencies on a permissioned, open-source chain built with the most cutting edge tech – with a built-in global market and limited barriers for growth once live,” said the report titled “Infrastructure and Design of Central Bank Digital Currencies.”
According to the report, the development of Diem has been considered a “catalyst” for the Chinese government to accelerate its plans for its digital currency issued by the state bank People’s Bank of China.
China is close to launching the digital yuan and is testing the CBDC with commercial institutions and the public.
“The Chinese government remains intent on establishing itself as a central player in the emerging global digital currency market,” the Bison Trails report stated.
The U.S. Federal Reserve is taking a more cautious approach regarding the issuance of a CBDC with no firm commitment to date.
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