Quick Take…what’s up with CBDCs?
Kit Knightly
Have you seen a mainstream headline about central bank digital currencies (CBDCs) so far this year?
Probably not.
What used to be a regular on the front page has been curiously absent. What stories there are have been tucked away, and the tone is decidedly changed:
Is a digital euro necessary for monetary sovereignty? Rethinking the CBDC debate
That’s from Santander, riffing off a report from the Centre for Economic Policy Research (CEPR), “Central bank digital currency and monetary sovereignty”, which concludes [emphasis added]:
the case for CBDC as a prerequisite for monetary sovereignty is weaker than often claimed. History suggests that sovereignty ultimately rests on legal authority and public balance sheets, not on universal access to public money. Confusing money with payments risks misdiagnosing the problem and misallocating policy effort. For Europe, the digital euro may play a useful symbolic role, but the effective defence of monetary sovereignty will continue to depend on regulation, fiscal capacity, and the central bank’s willingness to absorb risk when it matters.
Just a few hours ago, Forbes published this:
The Philippines Went Majority-Digital Without A Super-App Or A CBDC
Which talks up the Philippines’ approach, building digital financial infrastructure (“rails”) but letting private digital wallet providers compete to use it.
Recent years have already seen several major economies – notably Japan, Australia and Canada – pause or outright abandon CBDC development.
There’s a shift in the narrative here, but why? And what does it mean? Is it related to the emerging “multipolarity” we’re hearing so much about?
If countries do go ahead with CBDCs, it’s possible the dream of global interoperability is over, at least according to this piece in Forbes, which headlines:
After MBridge and Agora, Multilateral CBDC Interoperability Is Dead
And sub-heads:
The original BIS vision of a globally interoperable CBDC empire has fallen by the wayside as countries develop bloc by bloc.
It’s quite an interesting, if jargon-heavy read; here are some potential highlights [with emphasis added]:
ASEAN is building the same approach as a bloc. The 2023 Leaders’ Declaration on Regional Payment Connectivity has linked Thailand’s PromptPay, Indonesia’s QRIS, Singapore’s PayNow, and Malaysia’s DuitNow into an expanding mesh, with full ASEAN interoperability targeted by the end of 2025. Intra-regional local currency settlement has more than doubled, from about 7 percent of regional payments five years ago to over 15 percent today. Brazil’s Drex CBDC pilot and Pix’s continued export ambitions follow the same logic. Build bilaterally. Avoid the bloc choice. Hedge with non-CBDC rails that already work.
The infrastructure was never neutral, and pretending otherwise was the project’s foundational illusion. What comes next is a fragmented map of bilateral, bloc-specific, and corporate-built corridors, negotiated one pair of countries at a time. There is no single global rail in it.
To translate the Forbes-speak: The whole CBDC thing is getting rather more…complicated.
Or at least it appears to be.
Whether this represents any real change in terms of approach, or simply an adjustment of nomenclature designed to camouflage the unchanging globalist policy, remains to be seen.
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