The Global Race for CBDC Dominance: What Does It Mean for Bitcoin?

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In recent years, with the rapid development of the global digital economy, Central Bank Digital Currency (CBDC) projects have gained significant traction worldwide. Governments and central banks around the globe are increasingly recognizing the potential of digital currencies to enhance the efficiency of financial systems, reduce costs, and improve the transmission mechanisms of monetary policies. According to the latest data from the International Monetary Fund (IMF) and the Bank for International Settlements (BIS).

As of October 2024, over 130 countries are in different stages of CBDC research and development, including major economies such as China, the European Union, the United States, India, and Brazil. The accelerated advancement of global CBDC projects is not only expected to reshape traditional financial systems but may also have profound implications for cross-border payments, monetary policies, and financial inclusion.

Overview of Global CBDC Project Progress

Major global economies have adopted different strategies and progress in the research and pilot testing of CBDCs.

For example, the People’s Bank of China (PBoC) initiated the development of the digital renminbi (e-CNY) as early as 2014 and began pilot projects in multiple cities in 2020. As of 2024, the use cases of the digital renminbi have expanded to cover retail payments, government services, cross-border payments, and other sectors, making it one of the most mature CBDC projects globally.

The European Central Bank (ECB) launched the “Digital Euro” project in 2021, aiming to complete its design and testing by 2026 and gradually introduce it to the market. Meanwhile, the U.S. Federal Reserve has taken a more cautious approach and is still in the research phase, with no clear indication of whether a digital dollar will be issued.

Other economies such as India and Brazil are also actively advancing their respective CBDC projects.

The Reserve Bank of India (RBI) plans to launch the digital rupee within the next three years, while Brazil’s central bank aims to introduce the digital real by 2025.

These countries’ CBDC projects not only play a crucial role in their domestic payment systems but could also have significant impacts on cross-border payments and regional monetary cooperation.

Potential Impacts of CBDCs on the Global Financial System

As CBDC projects accelerate across various countries, they may have far-reaching impacts on the global financial system in the following areas:

(1) Enhancing Cross-Border Payment Efficiency
Traditional cross-border payments often require multiple intermediary institutions, leading to delays and high transaction costs. The introduction of CBDCs can enable peer-to-peer payments, significantly reducing intermediaries and improving the efficiency and transparency of cross-border payments. For example, Europe and China are exploring the potential of using CBDCs for cross-border payment settlements to achieve seamless cross-border capital flows.

(2) Optimizing Monetary Policy Transmission Mechanisms
With CBDCs, central banks can provide funds directly to the public, thereby more effectively regulating the money supply and interest rate levels. This will significantly improve the efficiency of monetary policy transmission, especially during economic crises or market fluctuations. For example, during a recession, central banks can distribute funds directly to the public through CBDCs to stimulate consumer demand and prevent further economic downturns.

(3) Promoting Financial Inclusion
The introduction of CBDCs may also promote financial inclusion, particularly in developing countries and underdeveloped regions. Since CBDCs do not rely on traditional bank accounts, more people can access basic financial services through mobile devices, thereby enhancing financial inclusion in society as a whole. For example, in Africa and South America, CBDCs can effectively address the issue of a large population being unbanked due to insufficient banking network coverage.

Challenges and Future Outlook of CBDC Implementation

Despite significant progress made in the CBDC field globally, the promotion and application of CBDCs still face many challenges. First, privacy and security issues need to be addressed — how to ensure user privacy and prevent the misuse of digital currencies while achieving transaction convenience is a pressing issue for central banks. Secondly, the development and maintenance of technical infrastructure, especially in cross-border payment scenarios, require interoperability between different countries’ CBDCs, which involves coordinating technical standards and regulatory frameworks.

In the future, as more countries’ CBDC projects enter the pilot and promotion stages, the global financial market will face unprecedented changes. The introduction of CBDCs will not only help countries enhance the stability and resilience of their financial systems but also bring new competitive dynamics to the global monetary system. During this process, balancing national interests and ensuring fair competition will become the focus of attention for all parties.