While much attention focuses on the retail central bank digital currency (CBDC) ruminations of China, Europe and the United States, smaller jurisdictions are leading the way. For example, Uruguay, the Bahamas, the Eastern Caribbean Central Bank, Nigeria and Jamaica have each launched pilot CBDCs over the past three years. The potential benefits of CBDCs are numerous – from automating certain tax payments to preserving a nation’s monetary sovereignty – if only theoretical at this stage. The idea is to revamp a crucial part of society, how money is issued and flows through an economy, and so, even small design choices can have substantial effects. So central banks are proceeding carefully, but given the amount of intellectual effort being expended, it’s likely CBDCs will have a place in the global financial system.
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