Canada, India and Nigeria make steps toward CBDCs adoption

This week, several central banks at once released announcements regarding national digital money. Financial regulators of Canada, India, and Nigeria made moves toward launching their own central bank digital currencies (CBDCs).

The Central Bank of Nigeria (CBN) has this week redoubled its investment and research into crypto’s underlying technology, blockchain, and has set a clear date for the pilot scheme of its blockchain-powered central bank digital currency (CBDC).

On Oct. 1, CBN will launch a pilot scheme for “GIANT,” a CBDC project in development since 2017 that runs on the open-source blockchain Hyperledger Fabric, as Cointelegraph reported.

CBN’s information technology director Rakiya Mohammed said the bank might conduct a proof-of-concept before the end of 2021. In a webinar this week with stakeholders, CBN representatives reportedly emphasized that the institution could not afford to be left behind while the vast majority of central banks worldwide make headway with their own CBDC research and development.

At the same time Bloomberg reported, the deputy governor of the Reserve Bank of India (RBI) T Rabi Sankar said in a speech on Thursday that the RBI will introduce its own version of Central Bank Digital Currency (CBDC) in a phased manner and after carefully weighing its impact on various issues, including how it could hamper the deposit mobilization abilities of banks, and its potential effect on the conduct of the monetary policy.

“However, conducting pilots in wholesale and retail segments may be a possibility in near future,” the RBI deputy governor added.

The RBI is currently working towards a phased implementation strategy and examining use cases “which could be implemented with little or no disruption,” Rabi Sankar said in an online discussion on the issue, organized by Vidhi Centre for Legal Policy.

Two days before, the Bank of Canada published a staff paper titled “The Positive Case for a CBDC,” saying a central bank digital currency (CBDC) is “probably necessary” for a competitive digital economy.

The authors of the paper outline several potential benefits, such as promoting competition in the financial sector and improving consumer choice. The bank also noted that reliance on costly third parties and intermediaries could be reduced or eliminated, further streamlining the financial system.

The paper concluded by noting that a CBDC could increase welfare, reduce welfare losses, and advance digital innovation, adding:

“A CBDC might be beneficial and probably necessary to ensure a competitive and vibrant digital economy.”

As reported before, more than 60 central banks around the world are studying the feasibility of a digital currency.

The People’s Bank of China is leading with the digital yuan, as the total number of transactions using the digital yuan by the end of June was 70.75 million, spread among almost 21 million personal wallets and 3.5 million enterprise wallets.