Digital currencies mark a tectonic shift for banking

Significance

Nigeria will be the 15th country to launch a pilot of central bank digital currency (CBDC); China was the first major economy to do so. A further 68 central banks are in the research and development phases that precede a pilot.

Impacts

• China may roll out its CBDC nationwide in 2022, and if so, could force the United States to accelerate its own CBDC project.
• CBDC projects are fraught with technical and legal difficulties, and planned schedules may not always be held.
• CBDCs will not compete with non-digital currencies until more major economies disseminate a CBDC.
• Cash still dominates in many nations and CBDC adoption will be slower where people are reluctant to lose the anonymity of cash payments.