China’s leap into the Central Bank Digital Currency [CBDC] game has got other countries in a frenzy. Countries like Russia and the US have been trying to up their game in the same. However, they would still remain way behind as China is almost at the final stages in the development of the digital yuan. Citing pandemic as a reason, Russia has revealed an increased interest in CBDCs.
Pandemic Stimulated CBDC Game
In a recent release by the Bank of Russia, several issues that the pandemic had caused the entire globe were addressed. The global economy undoubtedly took a hit and disrupted several markets. The value of digitalization especially to the financial sector was noted in this entire pandemic. Hence, the Central Bank Governors’ Club that was home to representatives from 26 central banks of the Black Sea Region, Central Asia as well as Balkan Countries held a meeting and addressed the need for the development of a CBDC in the current world.
Preceded by Elvira Nabiullina, the governor of the Bank of Russia, the meeting was held online and had the governors of over 22 countries including, Albania, Bosnia, Greece, Israel, and several others.
Elaborating on why the central banks of different countries had to be keener or already are, the Bank of Russia’s blog post read,
“The COVID-19 pandemic has, among other things, affected the further expansion of e-commerce and electronic settlements technologies. This is one of the reasons why financial regulators are more and more interested in central bank digital currencies.”
Rolling out a CBDC is not an easy task. China has been carrying out operations to accelerate the process of CBDC development. However, the country took several years to do so as numerous elements concern the government. In the latest meeting of the Central Bank Governors’ Club, the Deputy Governor of the Bank of Russia Alexey Zabotkin addressed the aftermath and risks associated with the development of a CBDC.
Zabotkin further included in the meeting,
“While arranging the emission of a digital currency, a central bank should, first of all, assess the impact it will have on monetary policy and financial stability, then develop a procedure to avoid and mitigate cyber risks.”
Several banks around the globe have been assessing the development of the CBDC. However, the release and its impact is what the world is waiting to see.