How CBDCs can change global platform in 2022

Highlights

• According to a report from the Atlantic Council, there are almost 81 countries in the world who are in the research phase for CBCDs.
• The Bahamas, Saint Kitts and Nevis, Antigua and Barbuda, Saint Lucia, Grenada, and Nigeria are some of the countries where CBDCs are being actively used as a mode of payment.
• In 2020, there were only 35 countries who were even considering a CBDC.

The central bank digital currencies (CBDC) have moved a step ahead from just being a concept on paper to many countries seriously exploring and adopting it as an alternate mode of payment. Many countries are already in the process of testing their own CBDCs to understand how they can co-exist with the fiat currencies. The concept has particularly gained momentum during the Covid-19 and following the crypto crash in April-May this year. Today, many central banks feel that it is critical and more dependable as the cryptocurrencies are the future.

So, how CBDCs can change the global scenario in 2022. Let’s have a look.

Can CBDCs reach a new high in 2022?

In 2022, the CBDCs could very well see a grand welcome in many countries. According to a report by the Atlantic Council, there are almost 81 countries in the world as of December 2021, which are in the research phase to test the CBDCs and are willing to take it to the next testing phase. In 2020, there were only 35 countries who were even considering a CBDC.

CBDCs are already functional in some form or the other in countries such as the Bahamas, Sweden, Nigeria. In China, which is the leader of the pack, is already planning to test its digital yuan during the 2022 Beijing Winter Olympics. The Winter Olympics, which will commence from 4 February, could very well see foreign athletes and visitors to use digital yuan (e-CNY) on a larger scale, wherein it will be used as a mode of payment not only by the domestic but as international crowd as well.

People’s Bank of China (PBOC) Deputy Governor Li Bo had hinted that they will try to make the e-CNY available soon. China, in fact, has already allowed the residents of Shenzhen and Beijing to test the currency with retailers.

Also read: How high will Sylo crypto go after its huge rally?

CBCDs for transactions

Though still unimaginable, but inclusion of CBDCs could see transactions happening in CBDCs instead of traditional fiat currencies. CBDCs could very well used as a major mode of payment in the future, which is not only safe, but at the same time robust enough to thwart any form of inflation.

Compared to traditional fiat, CBDCs would offer the users better liquidity, scalability, anonymity, and faster settlement and this could very well be the preferred mode of payment systems within organizations as well.

More extensive trials

The CBDCs could undergo extensive testing before fully bringing it on a larger scale. Countries, which are in the testing phase, could adopt phased testing before going in the final stage. Currently, only the Fed Reserve has not committed to the launch of CBDCs.

Also read: Will Saito crypto touch $2 by 2022?

India, the second largest democracy, is also planning to launch CBDCs in 2022. In fact, the Reserve Bank of India is considering the feasibility of CBDC pilot project in the next fiscal, i.e., between April 2022 and March 2023.

All major countries could undergo exhaustive testing and resolve issues related to CBDC like validation mechanisms, cyber risks threat, and adoption to the day-to-day lifestyle.

Conclusion

In 2022, we may see a global platform where CBDCs would be used regularly, along with a new system where both fiat and digital currencies can co-exist. The number of countries to adopt CBDCs could very well go up from five to 10 in 2022. CBDCs could open new gateways for the central banks to strengthen their financial system and get the checks and balances in order. This could reduce the risks of frauds and cyber threats and it could hence bring in more stability to the financial world.