Did CBDCs affect the crypto space in 2020, and what’s next in 2021? Experts answer

It is hard to imagine that just two years ago, the general discourse around central bank digital currencies, or CBDCs, was mainly focused on the potential and possibility of issuing them. Even in 2019, the question was about whether we need state-owned cryptocurrencies, with only 70% of central banks worldwide studying the potential of issuing a CBDC, according to a survey published by the Bank for International Settlements at the beginning of 2019. But this year, everything is indeed different.

2020 started with a major event within the financial world: the World Economic Forum in Davos, where the WEF released a toolkit for policymakers regarding the creation of CBDCs. And according to a recent BIS report, 80% of the world’s central banks have already been evaluating CBDC adoption. The news that central banks worldwide had started actively researching, studying, testing, etc., kept coming every month this year: Australia, Brazil, Cambodia, Estonia, Jamaica, Kazakhstan, Kenya, Lithuania, Russia, South Korea, Sweden, Thailand and the United Arab Emirates, to name a few. Even Japan, which two years ago was among the major critics of central bank digital currency, changed its mind.

Although the inevitability of central bank digital currency becoming a global phenomenon became certain this year, there is an important trend that has also become clear: Central banks in emerging market economies are moving toward issuing CBDCs more rapidly than developed countries, which are taking a more cautious stance. For example, the European Central Bank is discussing launching a consideration phase for a digital euro next year, and launching a digital euro is at least a five-year plan. Canada is also developing a CBDC at “a good pace,” according to Timothy Lane, deputy governor of the Bank of Canada. Japan’s digital yen will take years to issue, according to a former Bank of Japan official, while this fall, the Bahamas became one of the first countries in the world to…

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