Sergei Kondratenko: global trends and pilot projects of CBDC

In world practice, there are different approaches to the launch of digital currencies by central banks (CBDC). According to the analysis of financial technology expert Sergei Kondratenko, there are two main categories of CBDC projects – retail and wholesale. The former are focused on use by residents of the country, and the latter on interbank transfers and large corporations.

The specialist reports that according to the latest data from the Atlantic Council, 130 global central banks are actively developing and implementing their CBDCs. They account for 98% of global GDP. Kondratenko notes that 89 countries are developing digital currencies, while 24 are at the official launch stage. Additionally, 10 countries are testing their digital currencies.

Sergei Kondratenko is a recognized specialist in a wide range of e-commerce services with experience for many years. Now, Sergei is the owner and leader of a group of companies engaged not only in different segments of e-commerce, but also successfully operating in different jurisdictions, represented on all continents of the world. The main goal is to drive new traffic, create and deliver an online experience that will endear users to the brand, and turn visitors into customers while maximizing overall profitability of the online business.

The evolution of digital currencies: global achievements and successful launches of CBDC by the leading countries of the world – Sergei Kondratenko

The domain expert considers CBDC to be an effective option for transforming the current monetary system. Sergei Kondratenko emphasizes that the introduction of CBDC can significantly strengthen the stability of the banking system. The specialist suggests taking a closer look at what progress countries have made in the development of CBDC.

In 2022, according to the expert, there were only three digital currencies in operation in the world: in the Bahamas – the digital Sand dollar, in the Caribbean – Dcash, in Jamaica – JAM-DEX.

However, it was in 2022 that impressive results were achieved in the implementation of CBDC in the global financial community. Fintech specialist Sergei Kondratenko talks about them.

• The People’s Bank of China has begun active trials of the digital yuan (e-CNY). This project has successfully expanded to 15 provinces, where the volume of transactions on the e-CNY network has exceeded 100 billion yuan (approximately $13.9 billion). Thus, the yuan has become the largest digital currency in the world.
• The Central Bank of Nigeria (CBN) has increased the functionality of e-Naira to attract new users. There are about 270 thousand active wallets in the country. The number of transactions with e-Naira reached 200 thousand, amounting to approximately 4 billion naira (about $9.5 million).
• The Bank of France (Banque de France) has developed a test version of a retail CBDC.
• A pilot project for digital rial on the Borna platform has started in Iran.
• Project Ubin+ is being tested in Singapore. The goal is to explore the possibilities of cross-border payments using wholesale CBDC.
• Digital rupees are available to over 50 million people in India.

Sergei Kondratenko states that by the end of 2022, 17 countries on the world stage were actively testing and developing their digital currency projects. Some of them have achieved significant success.

• Ukraine: The country’s National Bank has proposed several potential scenarios for the development of the e-hryvnia.
• Sweden: The Reserve Bank (Riksbank) is actively preparing for additional research into the potential of the digital krona.
• Ghana: The Central Bank of Ghana (BoG) sees the digital cedi (e-cedi) as the only mechanism for increasing access to financial services for the country’s residents. They are working in the direction of its development.
• Kazakhstan: The National Bank of Kazakhstan (NKB) intends to use the BNB Chain blockchain to test the digital tenge.
• Türkiye: test transactions with the Digital Turkish Lira were successful. The country is preparing to introduce digital currency.

As Sergei Kondratenko notes, the overall picture suggests that all G7 countries and 19 G20 countries are actively developing and researching the possibilities of digital currency projects. And 11 states have successfully implemented a full-fledged digital currency.

Sergei Kondratenko: regional global analysis of successful and unsuccessful CBDC projects

The expert says that Nigeria, the Bahamas and Jamaica were the first to fully launch their digital currencies. Ecuador and Haiti decided to abandon this idea. The projects were abandoned due to high development and maintenance costs and low interest from residents. Sergei Kondratenko notes that in the USA and France, opposition to the development of a digital dollar has even formed. The main reason for the protests is concerns about the high degree of control and maintenance of CBDC by the authorities. For the same reason, there are protests in Europe against the digital euro.

Digital currencies of the Caribbean region

The Bahamian “Sand dollar,” according to Sergei Kondratenko, is the world’s first retail CBDC. It was introduced in October 2020. Users open digital wallets directly on the Central Bank platform through a mobile application. In this case, an intermediary bank is not needed.

The main goal of introducing CBDC is to ensure financial inclusion in a country where approximately 20% of the population does not have bank accounts.

– In 2022-2023, there was a sharp increase in the use of CBDC in this region. Now 24% of the country’s population actively use e-wallets. Their number reaches 100 thousand. This is due to the lifting of restrictions after COVID-19, the recovery of tourism and tightening control over paper money by the authorities.– states Sergei Kondratenko.

Jamaica also launched its Jam-Dex in the Caribbean in 2022. However, as with the Bahamas, implementation has been slow. Less than 10% of the country uses a digital wallet.

Kondratenko adds that in the Eastern Caribbean region, which includes 8 countries, the DCash digital currency project is at the final pilot stage. This is the world’s first retail cross-border CBDC.

Digital Yuan in China: limited transaction volume and challenges to popularization

According to the latest report of the People’s Bank of China, by the end of 2022, there were 13.61 billion CNY ($2 billion) in circulation – this is 0.13% of the money supply in the country or $14 billion. This figure, according to Sergei Kondratenko, is extremely small for China, where the bulk of retail transactions are carried out non-cash.

Indian Digital Rupee: Pilot Projects, Reforms and Prospects

Sergei Kondratenko reports that a pilot project to launch a digital Rupee in India began at the end of 2022. It included the “wholesale” digital rupee (e₹-W). Literally a month later, the “retail” digital rupee (e₹-R) project was launched with the participation of individual banks and retailers.

Despite the adoption of CBDC, India has seen an increase in the use of cryptocurrencies. The expert is sure this is due to the fact that the country has not yet developed full-fledged regulation for them. However, Indian authorities are focusing on the use of the digital rupee in cross-border payments. While the “retail” digital rupee has not become widespread (only 50 thousand users at the beginning of 2023). At the same time, Kondratenko notes that the “wholesale” option is being actively implemented.

If we talk about other countries, a pilot project for a wholesale CBDC called “France CBDC” has started in France. Similar initiatives have been launched in the UAE and Saudi Arabia under the name “Aber”. Retail CBDCs, according to Sergei Kondratenko, are in pilot mode in Ghana with the name “e-Cedi” and in Uruguay with “e-Peso”. Similar research and development is also underway in Israel, Kazakhstan, Sweden, Turkey, Brazil and Iran. Thus, we see that the world is gradually moving towards financial digitalization. This process, due to the peculiarities of adaptation to different economies, proceeds at a slow pace.

This article was provided by Gerald Crowford from BuyMedias