Central Bank Digital Currencies Activity Highlights — June 2020

Herwig Konings
8 min readJun 17, 2020

The team at Security Token Advisors recently put together the largest list of global CBDC activity available on the web. Here are the major takeaways I’ve found.

To see the full list of Central Bank-Issued Digital Currency activity, which includes over 45 different central banks, check out the report by Security Token Advisors by clicking here!

1. Some Countries Are Too Cool for CBDCs

While over 40 different central banks explore the potential of digital currencies, some of them have already concluded they don’t want them because their economies are too advanced (oh, the irony!).

Switzerland, which is considered a major financial center in the world, came to the conclusion that CBDC’s “bring no additional benefits for Switzerland,” and that “Instead, it would give rise to new risks, especially with regard to financial stability.” The Bank of Israel too suggested that a CBDC is “not currently relevant to the Israeli economy” in their CBDC report for 2018.

Then there is the United States, which has its own intricate system in play. The Fed is already working on FedNow, a form of a wholesale CBDC used for private banks. Meanwhile, USD stablecoin initiatives are being developed by the private market, creating its own form of competition to the Fed. After all, Libra was condemned by the US government as something that has no business in the US. When will another private stable coin get big enough to be a threat to the Fed? Needless to say, the response by the US for a CBDC has been lacking. The Fed Chairman Jerome Powell has said in response to a legislative inquiry about a US digital dollar, “Overall, we observe that characteristics that make the development of a [CBDC] more immediately compelling for some countries differ from those of the U.S “ while also recently the Philadelphia Federal Reserve President Patrick Hacker said, “Frankly I don’t think we should be the first mover as a nation to do this…” in a press release about the results of a research project about CBDCs. Clearly, the US won’t have a universal CBDC anytime soon.

2. The Pioneers Take Arrows

The first movers of live CBDC programs need to be congratulated for the innovative work and the research that they did. Alas, most of these projects ultimately ended in their cancellation.

Take the first known CBDC to be tested, which was in Ecuador. The dinero electrónico project began in 2014 hoping to promote financial inclusion by banking the unbanked while saving money from antiquated cash management practices. Ultimately, no one trusted the money since the Central Bank of Ecuador has previously defaulted before. Private money solutions or cold hard was simply more trustworthy than its digital counterpart. The dinero electrónico was decommissioned in 2017.

And in Tunisia, the excitement around an e-dinar program bubbled to the point where the central bank had to deny any such program ever existed. Meanwhile, in Estonia, which considered to be one of the most digitally advanced countries in the world, even offering e-passports to international citizens who wanted to join Estonia’s digital economy. So naturally, in 2017, the head of the e-residency program of Estonia suggested a digital currency for Estonia’s digital economy. Shortly after the proposal, the European Central Bank jumped in disavowing it, and in the following year, the Estcoin project was canceled.

Still, other early movers tread onwards and with their CBDC trials and we are watching in anticipation of the results. Senegal, the trial country where the Central Bank of West African States (which represents additional countries in the region) has been testing an eCFA digital currency since 2016 is expected to expand across West Africa upon successful results of the program. And second movers are also jumping in, with China recently rolling out its DCEP digital currency this year and expectations for it to become the biggest CBDC in the world by the end of 2020.

3. The Caribbean is Hot in More Ways Than One

Island nations are particularly sensitive to the issues of physical cash. Take for example the Marshall Islands, which has over 1000 islands in its territory. Creating a banking system that relies on hauling cash from island-to-island is simply not ideal. Furthermore, the Marshall Islands only received their independence from the US in 1979, yet have been dependent on the US dollar through diminishing US grants given to them from the independence treaty. To counteract their dependence on these grants, and despite the International Monetary Fund’s disapproval, the nation intends to move forward with its novel SOV digital currency, which, I might add, is fully based on a blockchain infrastructure! The SOV will act as legal tender alongside the US dollar in the region and is being released into the economy this year.

And the Eastern Caribbean Central Bank, which represents 8 different island countries, has plans of its own to create a universal CBDC for the members to use. The DXDC system that has been in development since 2017 is slated for launch in 2021. And the central bank of the Bahamas has its Sand Dollar already live in the Exuma region with 1500 participants and 2000 more on the waitlist. The Sand dollar is expected to expand to the other islands of the Bahamas in the second half of 2020.

And to top it off, Curaçao & Sint Maarten’s central bank has been developing the CBCS digital currency system since 2018 and is targeting a 2021 launch. All this activity possibly marks the Caribbean as the hottest region for CBDCs in the world.

4. The Nordics Don’t Like to Use Cash

I’m not sure whether its the cold weather or just the culture, but the Nordic belt seems to be very ahead of the curve when it comes to CBDCs. Denmark, Finland, Norway, and Sweden all began researching CBDCs between 2016 and 2018 and all considered it for mostly the same reason, usage of physical cash has dropped to historical lows. Some have gone as far as predicting Sweden to become the first cashless society.

CBDCs are, of course, inevitable for a cashless future but for the time being, Denmark has placed itself in the too cool for school category saying “The potential benefits of introducing central bank digital currency for households and businesses in Denmark would not match the considerable challenges which this introduction would present.” Meanwhile, Finland, Norway, and Sweden continue their research with results and updates expected later this year and 2021. Don’t be fooled, this region is not the Caribbean. It may ultimately already be too late for a retail CBDC to be issued, with central banks citing massive adoption of digital payment solutions provided by private companies.

Don’t rule out Iceland though — in 2018 the Nordic island’s central bank put out a research paper around a possible rafkróna CBDC. Since the release, the central bank has since merged with a local private bank, so we’ll have to call this one a toss-up.

5. Few Want True Blockchain Decentralization

One of the key features of a central bank is that it is the final reserve of currency for a country. When it comes to leveraging blockchain technology and full decentralization, few central banks are interested. Instead, their counterpart of distributed ledger technology offers a more controlled and closed solution that still allows for using smart contracts, tokenization, and centralized consensus mechanisms. Even still, many more central banks, like China’s DCEP, Brazil’s PIX, and South Africa’s SARB, all have CBDC solutions that don’t even use distributed ledger technology yet. When it comes to using blockchain, Aleksi Grym, the Head of Digitalization at Bank of Finland represents most central banks’ view when he says A blockchain network would not be particularly suitable because it would be slow, poorly scalable, have latency issues, and because it would be complicated to incentivize and govern how its nodes should operate. It’s just much easier and more efficient for a bank to keep its ledger behind a firewall and let nobody near it.”

Those that do see value in distributed ledger technology — and there are some that see it as critical, including France’s, Lithuania’s, and Singapore’s central banks — typically end up partnering with enterprise blockchain giants like R3, Accenture, and IBM. It’s worth noting that they are mostly pilot experiments instead of live CBDC implementations whenever distributed ledger technology is used.

So who is truly the most innovative CBDC out there today? Well, remember the Marshall Islands? They actually don’t have a central bank at all! Instead, the country has passed a bill to implement use the SOV currency as its way to set the monetary policy. They are the real winners when it comes to making a truly trustworthy digital currency that leverages blockchain technology. Fixed supply. Decentralized consensus mechanism. Tokenized. Compliant. Distributed. It checks all the boxes. The monetary policy will be written into the blockchain, the RMI (Republic of Marshall Islands) community will elect new node holders, 10% of the funds are distributed to RMI citizens upon launch, with 40% of the supply being sold to the world, and the remaining amount earmarked for distribution through 4 national trusts. The SOV is the most innovative CBDC in the world, and it's not actually even issued or managed by a central bank.

6. The Bad Apples Hope to Avoid Sanctions

Some CBDCs have already managed to create a reputation as being a means to operate an economy without intervention from the outside world. Iran has recently been hit with sanctions by the US and doing business with the country is illegal. That isn’t stopping the central bank of Iran from looking into launching their own CBDC, with an official flat out saying “All cryptocurrencies have the ability to circumvent sanctions because they are not under the supervision of the US financial regulator.” This is exactly why you can’t just buy, use, or support any random cryptocurrency, you don’t know who issued it or what’s behind it and it could even be illegal to interact with.

Venezuela, which is suffering from massive currency devaluation and economic depression, is another example. In an effort to retain control and stabilize the economy, President Nicolás Maduro announced the launch of the Petro in December 2017, stating that it would be backed by Venezuela’s reserves of oil, gasoline, gold, and diamonds. Despite claims that the petro coin is seeing increases in usage, information around the coin itself is scarce. The US also has sanctions against Venezuela and President Trump has reinforced condemning the Petro Coin by writing an executive order that makes it illegal for anyone in the US to purchase or use the coin.


CBDC research is in full swing around the world. Most live use cases are built on completely centralized, existing fintech solutions typically using QR codes and mobile wallet infrastructure. The use case of financial inclusion and freedom of movement for money is too important for certain areas of the world and their expansion and growth are anticipated.

For more advanced economies, the use cases of digital cash and traceable, compliant transactions are seen as beneficial, but their technical deployment complicated. It will likely be several more years before we see proper rollouts of CBDCs in first-world countries. The United States, possibly among the last, with my personal inclination being that private stablecoin solutions will rule the market with oversight from regulators.

Finally, distributed ledgers will play the most important role in making CBDCs the next evolution of money. Technical limitations may be a common theme among the central banks, but that isn’t stopping some innovators from moving forward. We’ll have to see how things are in 2021 to get a better idea for what’s next in store for CBDCs.