The unprecedented rise of cryptocurrency continues to threaten the authority and power central banks have over the circulation and supply of money globally. This is pushing many countries to develop their own digital currency.
In October, Nigeria unveiled its digital currency, eNaira, becoming the first African nation to do it and the seventh in the world. Tanzania is set to take the second spot. Florens Luoga, Tanzania’s central bank governor says the country is already laying the groundwork for the production of its own digital currency.
The East African nation mirrors Nigeria’s motive for creating the eNaira, which is to increase remittances, foster cross-border trade, and improve financial inclusion.
“To ensure that our country is not left behind in the adoption of central bank digital currencies, the Bank of Tanzania has already begun preparations to have its own CBDC,” Luoga says at a finance conference in Dodoma, Tanzania’s capital.
What is Central Bank Digital Currency (CBDC)?
The CBDC is a digital form of fiat money issued by the central bank of a country, rather than by a commercial bank. Essentially, it is a direct liability of the central bank, and it’s built on a blockchain open ledger technology that prevents duplication or creation of fake units.
Bitcoin and similar blockchain-based cryptocurrencies inspired the CBDCs concept.
How many countries have launched digital currencies?
According to Atlantic Council, seven countries worldwide have fully launched a digital currency, with Nigeria being the latest.
Other countries that fully launched CBDCs before Nigeria are all from the Caribbean region: Bahamas, Grenada, Saint Kitts and Nevis, Antigua and Barbuda, and Saint Lucia.
Data by Atlantic Council shows that 16 countries are in the pilot stage; 15 in the development stage, 39 in research; 8 inactive and 2 have cancelled plans to launch digital currencies.
Countries in the pilot stage include China, South Korea, Saudi Arabia, United Arab Emirates, Sweden, Ukraine, Jamaica, and others.
“Of the countries with the 4 largest central banks(the US, the Euro Area, Japan, and the UK), the United States is the furthest behind,” the data reveals.
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