As 2024 nears, flying cars and teleporters are no closer to becoming a reality, but countries are hard at work devising digital currencies.
That’s just as cool as those other things… right?
What happened: South Korea is launching a retail central bank digital currency (CBDC) pilot next year, selecting 100,000 adventurous citizens to try spending with digital tokens.
- Interest in digital currencies has been on the rise, with Japan, India, China, and Hong Kong all launching, announcing, or expanding CBDC pilots in the past 12 months.
- The Bank of Canada (BoC) is investigating a digital loonie, releasing a a potential framework for how it might work—but no word on if they’d turn the loon into a cyborg.
Why it matters: Advocates of digital currencies believe they can make it easier for governments to distribute benefits, lower transaction fees for things like sending international payments, and improve inclusion for regions underserved by traditional financial services.
Yes, but: There’s a good chance nobody will bother using a CBDC because money is already so digital—ever heard of debit and e-transfer? People will also worry about technical and privacy concerns and find little reason to move over funds if they can’t build up interest.
- Even in Nigeria, a country that’s seemingly a perfect fit for digital currency as it's low on physical cash and big into crypto, hardly anyone uses the eNaira CBDC.
Bottom line: The BoC currently believes a CBDC isn’t necessary right now. The Canadian Bankers Association feels the same way. And the Canadian populous isn’t biting either, with over 80% of respondents to the BoC’s survey on digital currency saying they oppose it.—QH