PwC ranks CBDC, digital money projects
Blockchain and Crypto Specialist at PwC UK, Haydn Jones, says the success of eNaira, Nigeria’s central bank digital currency (CBDC) launched in the last quarter of last year, will inspire similar projects, especially among countries with low financial inclusion.

Jones states this in his comment on the unveiling of PwC report, which ranks CBDC projects across the world and difference being made by central banks to catch up with the trend.

“This year’s index shows that central banks are ramping up activity in the digital currency space. Countries are at different levels of maturity with CBDCs and each country has different motivating factors. Increasing financial inclusion, facilitating cross-border payments and controlling financial crimes are all factors that come into play. We expect CBDC research, testing and implementation to intensify in 2022. The success of eNaira is likely to spur CBDC development in countries where financial inclusion is one of the key desired outcomes,” Jones points out.

The new report analyses CBDC projects across the world, emphasising that “the future of money is digital”.

It is estimated that more than 80 per cent of central banks are considering launching CBDCs or have already done so, with eNaira, the first in Africa, in use.

The report, PwC CBDC Global Index, makes a distinction between retail and wholesale CBDC projects and concludes that the former is more developed while a few countries are making serious inroads into the development of the latter.

Retail CBDCs are designed for public use and are majorly driven by peer-to-peer (P2P) transactions while wholesale is majorly used by financial institutions. The report says retail CBDC projects have reached greater maturity levels than wholesale projects but adds that the past year has seen progress on several successful wholesale pilots.

Retail projects, according to the report, are led by eNaira and the Bahamas Sand Dollar, which was issued as a legal tender in 2020, making the Bahamas the first country to launch a CBDC.

China became the first major economy to pilot a CBDC in 2020 with the digital yuan. As of March 2022, pilot programmes were running in 12 cities, including Beijing and Shanghai, says the PwC index.

On the wholesale side, PwC adds, the leading project is the combined effort of the Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BoT) to launch the mBridge project, focused on developing a proof-of-concept prototype to enable real-time and cross-border foreign exchange payments on distributed ledger technology.

Also ranks high in the report is the work of the Monetary Authority of Singapore (MAS), with two new CBDC projects, as it continues the development of a wholesale CBDC for cross-currency payments.

The report also provides an overview of stablecoins, digital currencies benchmarked against fiat currencies such as USDT, which can allow a bridge to be created between the traditional financial ecosystem and digital technologies.

In his comment, West Africa Financial Services Leader and Chief Economist, PwC Nigeria, Andrew Nevin, also notes: “CBDCs will transform the payment system, as low value-added transactions become possible in a costless and secure way for everyone. The success could also catalyse more complex and transformative CBDC uses, including blockchain identity management, land registry, and supply chain verification. As each of the use cases develops, we can bring more people into the economic and financial system and lift tens of millions out of poverty.”