Recently, I’ve been paying attention to a major trend in global finance and have found that more and more countries are pushing forward with CBDC projects. This topic is worth a good discussion.

First, let’s talk about what CBDC is. Simply put, it is digital currency issued by the central bank, essentially a digital version of traditional fiat currency. Unlike decentralized cryptocurrencies like Bitcoin or Ethereum, CBDC is directly managed and guaranteed by the state, operating entirely within a legal framework. You can use it for payments, transfers, or storing value, just like electronic cash. Many countries choose to build CBDC using blockchain technology, but the core remains centrally managed, so the government can control the money supply and monitor capital flows.

Looking at the global practice makes it even clearer. The Bahamas launched Sand Dollar in October 2020, becoming the world’s first officially operational CBDC, mainly to solve payment issues on remote islands. Nigeria followed closely with the launch of eNaira in 2021, becoming the first in Africa. Jamaica’s JAM-DEX and the Eastern Caribbean Currency Union’s DCash are also already in use.

Major economies are moving faster. China’s digital yuan, e-CNY, is considered the largest-scale CBDC project so far, already tested in multiple cities and integrated into payment apps for daily shopping and public services. India is piloting the digital rupee, and Brazil is developing the Drex project to connect CBDC to the entire digital financial ecosystem. Russia, the UAE, the EU, Sweden, South Korea, and other countries and regions are also accelerating their experiments. According to statistics, over 130 countries and regions are researching or developing CBDC, covering a significant portion of the global GDP.

Why is CBDC so popular? It certainly has many benefits. First is efficiency improvement—transactions are fast, low-cost, and not limited by banking hours, which is especially important for e-commerce. Second, CBDC gives central banks powerful policy tools, allowing real-time monitoring of capital flows, increasing financial transparency, and combating money laundering and tax evasion. Governments can also implement financial support policies more quickly and accurately.

But risks must also be taken seriously. Privacy issues are a major concern; if data protection is inadequate, all transactions could be monitored. Cyberattack risks and reliance on high-tech infrastructure are also worries. Another deeper issue is the impact on commercial banks—if people move large amounts of deposits into CBDC wallets managed by the central bank, banks may face a decline in capital sources, affecting credit issuance and financial stability. Therefore, designing a reasonable CBDC model is especially critical during implementation.

From a broader perspective, CBDC is not just a technological trend but a strategic shift in the global financial system. In an era of increasing popularity of cryptocurrencies and stablecoins, CBDC helps countries maintain financial regulation authority while leveraging digital technology to promote economic growth. The future is likely to see a multi-layered financial ecosystem where CBDC, cryptocurrencies, and other digital assets coexist.