{"id":10465,"date":"2022-08-11T20:16:00","date_gmt":"2022-08-11T17:16:00","guid":{"rendered":"https:\/\/alfacash.blog\/?p=10465"},"modified":"2024-02-19T21:50:32","modified_gmt":"2024-02-19T18:50:32","slug":"countries-cbdcs-2022","status":"publish","type":"post","link":"https:\/\/alfacash.blog\/de\/2022\/08\/11\/countries-cbdcs-2022\/","title":{"rendered":"Countries that use CBDCs – and what it’s like!"},"content":{"rendered":"

Since the creation of Bitcoin, most cryptocurrencies have been an alternative to transcend the traditional financial system. However, some central banks worldwide have recognized the importance of digital coins. Let’s see which countries have decided to create their CBDCs: Central Bank Digital Currencies.<\/p>\n\n\n\n

CBDC is the answer of traditional financial institutions to blockchain technology<\/strong>. The CBDCs are similar to cryptocurrencies<\/a>. But, their issuer controls them completely. Theoretically, these digital currencies serve as a medium of exchange and store of value.<\/p>\n\n\n\n

Avant: the world’s first CBDC<\/strong><\/h2>\n\n\n\n

Contrary to popular opinion, the first attempt at CBDC came long before blockchain technology arrived. Das <\/strong>Avant<\/strong><\/a> smart card system created by the Bank of Finland in the 1990s was the world’s first CBDC<\/strong>. <\/p>\n\n\n\n

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Avant cards featured smart card technology similar to that currently used in debit and credit cards<\/a>. Although the Bank of Finland developed the system for three years, they sold Avant to commercial banks later. Once debit cards became less expensive and were upgraded to smart card technology, Avant became obsolete and went out of business.<\/p>\n\n\n\n

The Avant system was operational until 2006 but never gained wide public acceptance<\/strong>. Mainly because there were fees for recharging or using the balance, making it expensive in the long run.<\/p>\n\n\n\n

Countries with functioning CBDCs<\/strong><\/h2>\n\n\n\n

Currently, two countries have launched their CBDCs: the Bahamas and Jamaica.<\/p>\n\n\n\n

The Sand Dollar: The Bahamas CBDC<\/strong><\/h3>\n\n\n\n

The Bahamas became the first of the countries to launch<\/a> modern CBDCs in 2020. Since the land has only around 400,000 inhabitants, the process was quite fast. Mainly, this CBDC was born due to the difficulty of installing ATMs and bank offices on all the 700 country’s islands.<\/p>\n\n\n\n

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The Sand Dollar seeks to modernize and optimize the financial system of the Bahamas<\/strong>. In addition, it tries to reduce the costs of providing services and increase transactional efficiency. According to the International Monetary Fund (IFM<\/a>), the main challenge facing the Sand Dollar today is the financial education of citizens.<\/p>\n\n\n\n

Users agree<\/a> with the IFM regarding the lack of education:<\/p>\n\n\n\n

The Sand Dollar is having difficulty gaining traction. This is due to a lack of promotion and education of it. Persons on the family islands would need it more than persons in New Providence, Grand Bahama and other islands that have banking institutions.<\/p>

The need is there and it is backed by the Central bank so I would trust it.<\/p>Dwayne Adderley, University of Michigan.<\/cite><\/blockquote>\n\n\n\n

Interestingly, the name of this CBDC comes from the clipeasteroids<\/em>. Better known as Sand Dollars, they are a crustacean inhabiting the island.<\/p>\n\n\n\n

Jam-Dex: CBDC for Financial Inclusion in Jamaica<\/strong><\/h3>\n\n\n\n

Jamaican Decentralized Exchange (<\/strong>Jam-Dex<\/strong><\/a>) is the second CBDC already working and has been available since June this year<\/strong>. This is another of the CBDCs launched by countries to improve financial inclusion. It is worth noting that Jamaica’s economy is primarily cash-based, so the Jam-Dex seeks Jamaica’s transition to a digital economy. But, unlike the Bahamian Sand Dollar, the Jam-Dex does not run on Distributed Ledger Technology (DLT). <\/p>\n\n\n\n

Since August of last year, Jam-Dex has been undergoing pilot testing. Thus, they distributed the equivalent of $16 to each test participant. <\/p>\n\n\n\n

Also, this CBDC works under a hybrid distribution model. The Central Bank of Jamaica will issue Jam-Dex to commercial banks and other authorized financial institutions. These entities will distribute the currency to the retail market.<\/p>\n\n\n\n

Although the government created this CBDC to increase financial inclusion, users<\/a> are concerned about the censorship power that governments could acquire:<\/p>\n\n\n\n

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Kommentar<\/a> from discussion JohnCCPena’s comment from discussion "Jamaica Becomes The First Nation in the world to Issue a CBDC as Legal Tender."<\/a>.<\/div>