Central Bank Digital Currencies (CBDCs) are digital currencies issued and regulated by a country's central bank. Since they're designed to be digital representations of a national currency, CBDCs are recognized as legal tender.
Some central banks use blockchain technology for their CBDCs, while others opt for more centralized technology. But in all cases, CBDCs are not generally considered to be cryptocurrencies. That's because ultimately they're controlled by a central entity (central banks), whereas cryptocurrencies typically run on decentralized infrastructure.
Countries with CBDCs
At the time of writing, only three countries have fully launched CBDCs: Nigeria, The Bahamas, and Jamaica.
This number fluctuates, however, mainly because CBDCs are relatively new and governments are facing teething troubles.For example, just a few months ago the entire Eastern Caribbean Currency Union (ECCU) - eight countries - had a fully launched CBDC, DCash (“digital cash”), but it was temporarily halted due to technical hiccups.
Apart from those 3 countries...
44 countries are researching CBDCs
30 countries are in the development stage
36 countries are piloting them
And of the G20 countries, 19 are now in the advanced stage of CBDC development.
Just two countries have launched and later discontinued their CBDCs: Ecuador and Senegal.
Why are CBDCs so popular in the Caribbean?
- Some islands don't have easy access to banks
- Hurricanes can close banks for extended periods
- Caribbean countries have small financial sectors, limiting financial inclusion
- CBDCs can be tested on one island before a national rollout
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