Here they come: Governments around the world roll up their sleeves for CBDCs

The concept of a central bank Crypto currency (CBDC) has been gaining momentum in recent discussions as governments around the world accelerate the analysis and development of new types of money. This week’s focus is on India, France and Luxembourg.

CBDC is here

Following news of a wholesale CBDC pilot earlier this month, the Reserve Bank of India (RBI) has announced that it will test a retail Crypto rupee in December. The pilot project will be launched in four cities including Mumbai, New Delhi, Bengaluru and Bhubaneshwar.

Upon launch, State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank will be the initial banking participants. Nine cities and four banks will be added in the next phase of the scheme, according to the RBI statement on Tuesday.

The experiment will be open to a specific group of users and merchants. As the bank noted, the Crypto rupee will be “issued in the same denomination as notes and coins currently issued.” Merchants can pay by scanning the QR code.

India is realizing

The Reserve Bank of India said in October that it was exploring CBDC options for wholesale and retail use. India’s national Crypto currency, called the e-rupee, is an alternative payment method. India’s finance minister, Nirmala Sitharaman, revealed earlier this year that the RBI plans to launch a CBDC within the year.

Considering the fact that India relies heavily on fiat currencies, the openness of India to cashless payments is rather surprising.

Now India joins China, South Korea, Japan and other South Asian countries to accelerate the development of its own Crypto currency to make transactions more efficient and cutting-edge.

Besides Asia, the European Union and the United States have also put a lot of effort into the CBDC race. Banc de France, the French central bank, completed experiments in mid-2021 using a central bank Crypto currency (CBDC) for cross-border payments and transaction processing.

According to the latest news from the bank, trials of CBDC for settlement of bonds are underway. The initiative, called Venus, is testing the use of a CBDC in issuing bonds worth 100 million euros.

Nathalie Aufauvre, the central bank’s chief financial officer, said the experiment “demonstrates how Crypto assets can be issued, distributed and settled within the eurozone in a single day” and “confirms that a well-designed CBDC can play a role in developing secure tokenization in Europe.” play a key role in the financial asset space.”

Other entities involved in the Venus Initiative include Goldman Sachs, Santander and Societe Generale, as well as the European Investment Bank.

Tighten up on cryptocurrencies

Governments are promoting electronic payments, while CBDC research and development is intensifying. As people move away from cash payments, no country wants to be left behind. CBDC calls and proposals are becoming increasingly active and urgent.

However, when it comes to cryptocurrencies, governments are becoming stricter and financial institutions are becoming more cautious.

The Reserve Bank of India is skeptical of cryptocurrencies. Previously, the bank proposed a 30% tax on gains from cryptocurrencies and related asset classes. The Crypto rupee is also a crypto competitor.

The United States and the European Union have begun to tighten regulations on the cryptocurrency industry, especially after the series of scandals from June to the present collapsed.

China has long banned cryptocurrencies and similar decentralized assets, and this ban has been reinforced after the LUNA token crash. However, the country has started a large-scale pilot implementation of its Crypto yuan.

Countries expect that the design of CBDC will allow multiple central banks and commercial banks to collaborate. This has the potential to greatly simplify integration and improve the cost-effectiveness of future cross-border payment operations.

Many experiments are underway, but no projects have been completed yet. Whether a CBDC can be realized will depend on the legal framework and policies that support the issuance and distribution of cryptocurrencies, as well as the ways in which security risks and privacy concerns are dealt with.

The post Here They Come: World Governments Roll Up Sleeves on CBDC appeared first on Blockonomi.

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