Saturday Spotlight: Nigeria and China speed ahead of UK in digital money race
A new index charting the readiness and adoption of central bank digital currencies (CBDC) has seen Nigeria top the ranking with the e-Naira, launched in October 2021.
Nigeria’s lead is closely followed by other early CBDC adopters, the Bahamas, Mainland China, Jamaica and Eastern Caribbean.
The findings, from the PwC Global CBDC Index, capture the central banks’ progress and stance on CBDC development, in both a retail and wholesale context.
In the UK, the Bank of England and HM Treasury will later in the summer consult with industry to set out the assessment of the case for a potential UK CBDC, including the merits of further work.
However, the Economic Affairs Committee of the House of Lords recently declared CBDCs ‘a solution in search of a problem’.
Fall in cash
The interest in digital currencies follows the fall in cash payments.
In the UK, the Bank of England has reported a dramatic drop in recent years, with only 17 per cent of all payments in 2020 made using bank notes. This was down from over 50 per cent of payments in 2010.
Many Central Banks have also been driven by the rise of private sector cryptoassets, which the Bank of England and Financial Stability Board have recently called a potential systemic risk.
Stablecoins
PwC’s analysis also gives an overview of stablecoins, privately issued cryptoassets which aim to maintain a stable value by pegging to a fiat currency or other assets.
According to PwC’s Stablecoin Overview, four key characteristics can be used to determine a coin’s future utility. Namely, the level of regulatory oversight and registrations, the strength of evidence confirming the existence of the underlying assets backing the stablecoin, the nature of reserve holdings and underlying technology used.
Haydn Jones, UK Blockchain & Crypto specialist at PwC UK, told City PM this morning: “Globally, appetite is strong with over 80 per cent of central banks considering a CBDC.”
“Nigeria is leading the way with countries including the Bahamas, China and Jamaica with already live or near live currencies and many more expected to follow in the next few years.”
Jones added: “Here in the UK steps are being taken to look at how we could adopt CBDCs, with the Bank and the Treasury looking carefully at the potential design and development.”
“Digital currencies could prove to be a huge boost, opening up vast new markets and creating sources of business that could last for decades. As CBDC adoption looks closer to becoming the new global norm, it’s vital the UK continues to ensure that we remain future focused and alive to change, whatever that may look like,” Jones concluded.