The digitalization of the economy, interest in cryptocurrency from business are pushing central banks to develop national digital currencies. China, Japan, South Korea, Belarus, Ecuador, Kazakhstan, and other states announced their intentions. The process of introducing a national digital currency is at different stages – from discussion to testing. The full implementation has not yet been announced.

What is CBDC

National digital currency (English central bank digital currency, CBDC) is an electronic obligation that is denominated in the fiat currency of the country. It can serve as a complete analog of fiat money, a means of measure and payment.

The topic of national digital currencies was studied by 70% of all central banks in the world. It is planned to create a two-tier system when the central bank is engaged in the issue and control of the currency turnover, and financial institutions ensure the conduct of various operations.

Distinguish between retail and commercial CBDCs. The first option is to replace fiat money for payments for goods, savings. Commercial digital currencies are intended for use by banks and other specialized institutions.

Why is CBDC Needed

Currently, all countries use virtual money for payments and wire transfers. The national digital currency is different from virtual money. The main differences are:

  • lower costs of commission costs for transfers;
  • higher efficiency of fiscal policy;
  • CBDC will provide competition with cryptocurrencies, increase the stability of the national financial system;
  • the lending sphere will become more transparent;
  • CBDC will help to counteract the dollarization of the economy inherent in some countries and will make the national currency more competitive.

The main reasons for research in the field of national digital currency, practical implementation depend on the level of development of the country. Thus, developed economies strive to improve security and obtain greater financial stability. For the central banks of developing countries, the main criterion is financial inclusion – the availability of various services for the population and business.

Differences between cryptocurrencies and fiat currencies

The main difference between CBDC and Bitcoin and other cryptocurrencies is the source of emission. National digital currencies are issued by central banks, they are in the legal field of the issuing country.

In addition, CBDCs are backed by fiat currency or gold. Therefore, their volatility is lower than that of Bitcoin and other popular tokens. National digital currencies are regulated by the issuing bank, and one supervisory authority is used.

Cryptocurrencies are decentralized, not controlled by external regulators.

Fiat currency is also issued by the central bank. At the same time, operations with CBDC can be transferred to the digital field, but fiat money cannot. Other advantages of digital money:

  • higher speed of operations;
  • lower operating costs;
  • process automation.

The regulator will be able to control cash flows. The result is a decrease in illegal operations with budget funds, theft, money laundering.

An important difference between CBDC and Fiat is security. After all, in fact, it is a cryptocurrency based on blockchain technology. However, the centralization of the national digital currency reduces its security level. Much depends on the technical features of the implementation. Also, security depends on the country, higher in a state with a strong legislative base.

Application in different countries of the world

The introduction of national digital currencies is carried out by countries with different levels of economic development. Technologically developed states have advanced farthest in the process of developing CBDC:

  • South Korea;
  • Japan;
  • China;
  • Sweden

In the summer of 2020, the Central Bank of Japan began testing the digital yen. At this stage, the technical sustainability of the CBDC was assessed. A number of problems have been identified – the lack of smartphones and other mobile devices with access to the Internet in 100% of the population, stability in offline mode.

The Central Bank of the Republic of Korea in 2021 is testing the digital national currency (won), which will last until December. The design has already been developed, the technology has been audited. At the same time, the country’s main financial regulator is not sure about the launch of CBDC into implementation, even if the testing is completed successfully.

China is the farthest country on the road to adopting the digital yuan. In 2020, pilot tests took place in several cities of the country at once. Employees received a portion of their salary in digital currency, and a mobile app for CBDC was tested. Thanks to the creation of the digital yuan, the country’s authorities are planning to compete with the dollar for the status of the world currency.

Sweden was one of the first to embark on research in this area. The country claims the status of the first “non-cash” state and the introduction of the digital crown will only help to achieve this goal.

A number of other states are showing interest in the national digital currency, holding consultations and discussions. First of all, the UAE, Australia, Canada, Belarus, Kazakhstan, and others should be noted.


Ukraine is ahead of many countries in the world in terms of the digitalization of the financial component of the economy. Retail digital hryvnia testing was carried out in 2018. Technically, CBDC was implemented using the Stellar protocol. This protocol was found to be unsuitable for the national digital currency based on the test results. At the same time, the alternative was not named, the National Bank is studying other options. However, the NBU did not abandon its plans and plans to launch the project in the near future.