U.S. Falls Behind in Race for CBDC

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New data released by the Atlantic Council, a global nonpartisan organization, indicates that the United States is losing ground in the global race to launch a central bank digital currency (CBDC).

The Atlantic Council has released an update to its global central bank digital currency tracker which sources information pertaining to the development of CBDC’s from the Bank of International Settlements, the International Monetary Fund, and the council’s in-house research and analytics team. The data indicates that out of the 90 countries tracked, 81 countries are actively researching the uses and implementation of a CBDC which is a significant increase from the 35 nations observed in May 2020.

Nine countries have already fully launched CBDC products, including The Bahamas, Antigua and Barbuda, Saint Kitts and Nevis, Montserrat, Dominica, Saint Lucia, Saint Vincent and the Grenadines, Grenada, and most recently Nigeria. Fourteen countries have already begun pilot programs and real world applications including China, South Korea, Sweden, and the Ukraine.

While development and implementation of CBDCs are under full swing around world, the majority of nations who have publicly announced their interest in the technology have not progressed beyond the “research” stage of development including the United States. Focusing just on the largest central bank institutions including the Federal Reserve, the European Central bank, the Bank of England, and the Bank of Japan, the United States is the only one still in the research phase while the others are either in active development or holding pilot programs.

U.S Federal Reserve Chairman Jerome Powell stated during a conference held by the Bank for International Settlements that “because we’re the world’s current principal reserve currency, we don’t need to rush this project and we don’t need to be first to market. A dollar CBDC would have potentially large implications here and around the world, and we’ll be sure to think carefully about all of that and engage very broadly with the public around the world, in particular here in the United States before we even approach a decision. We are sort of purveyors of stability, and we do not want to destabilize that.”

While U.S. officials are wise to not rush the process of creating a central bank digital currency due to the dollar’s importance to global trade, the nation does risk the chance of a competing currency usurping the dollars position such as the digital yuan from China. If other nations or central banks are able to implement the technology successfully there could be a serious threat to the U.S. dollar’s status as the world’s reserve currency.