CBDCs continue to be actively developed around the world. News about central bank digital currencies in the past few days came from all over the world: Zimbabwe, Russia, and Hong Kong.
Three countries have announced improvements in the development of public digital currency projects:
- The Reserve Bank of Zimbabwe has developed a CBDC implementation plan.
- The Central Bank of Russia has outlined a timeline for the comprehensive implementation of the digital ruble.
- The Hong Kong Monetary Authority is exploring options for CBDC use.
Let’s consider all the news one by one.
Fintech Sandbox to Test CBDC Launched in Zimbabwe
The Reserve Bank of Zimbabwe (RBZ) has released a statement indicating that a plan to introduce a CBDC in the country is ready. The plan will be published shortly, followed by a 90-day public consultation on the government initiative.
The bank’s manager, John Mangudya, also said that a regulatory fintech sandbox had been formed to test the necessary technologies. Two fintech companies, Lloyd Crowdfunding and Uhuru Innovative Solutions, have been granted access to the testing.
The tests will last until 2023, inclusive. By that time, bank representatives expect to collect and analyze stakeholders’ opinions, potential users, and the public. This will allow evaluating potential scenarios of CBDC use, as well as the benefits and risks of its implementation. Moreover, it will create a basis for the regulatory framework for developing financial technology in the country.
Recall that in neighboring Nigeria, eNaira was introduced in October 2021. In May 2022, the number of its users had already exceeded 400,000.
Central Bank of Russia Plans to Introduce Digital Ruble in 2024
The Central Bank of Russia has published the Monetary Policy Guidelines for 2023-2025 report. According to the document, the Bank of Russia plans to comprehensively introduce the digital ruble within two years. The project is already under development, and different financial structures will be gradually involved in its testing.
Currently, the regulator is working on various scenarios for using a CBDC and options for applying smart contracts. A full road map of the project is expected by late 2023. In 2024, the Central Bank plans to implement the basic functions of the digital ruble, while the offline mode, the connection of non-bank financial institutions and exchanges are expected in 2025.
The Bank of Russia intends to start testing with real transactions and users as early as April 2023. At the same time, the introduction of the central bank digital currency is planned to be carried out in stages, so that all market participants will have the opportunity to adapt to the new conditions.
Representatives of the Central Bank emphasized that they do not plan to pay interest on deposits in digital rubles on their CBDC platform. This will preserve the attractiveness of traditional bank deposits and avoid the outflow of funds from the banking sector. Representatives of the Central Bank of Taiwan expressed a similar position in early July.
Hong Kong Authorities Involve Public in Digital Currency Study
The Hong Kong Monetary Authority (HKMA) holds the annual Global Fast Track financial technology competition. In 2022, it has created a separate area in which business representatives can present their concepts on various aspects of CBDCs:
- adoption;
- programmability;
- interoperability;
- privacy;
- cybersecurity.
The HKMA is specifically interested in foreign exchange, liquidity management, and offline payments via CBDCs.
By involving private sector representatives in the development of the central bank digital currency, the Hong Kong Monetary Authority intends to stimulate research into the use of digital currencies. The authors of the most promising projects will be able to turn them into reality in cooperation with the HKMA.
Hong Kong, which was recently recognized as the most advanced cryptocurrency jurisdiction, is already developing its own CBDC project for cross-border payments called e-HKD. The project partners are the central banks of Mainland China, the United Arab Emirates, Thailand, and the Bank for International Settlements.
According to a study by the Bank for International Settlements, more than 90% of all central banks researched CBDCs in the fall of 2021.
