The United States’ recent ban on central bank digital currencies (CBDCs) could have far-reaching consequences for global CBDC initiatives, experts suggest.
Trump’s Executive Order Prohibits CBDCs
On January 23, former US President Donald Trump signed an executive order banning the establishment, issuance, and circulation of CBDCs in the country. This move, celebrated by parts of the crypto community, has sparked discussions about its potential global impact, especially among countries exploring CBDC development.
CBDCs, issued by central banks, are designed to improve payment system efficiency and inclusivity. Retail CBDCs cater to the general public, while wholesale CBDCs are tailored for interbank transactions and securities settlements.
Global Impact on Retail and Wholesale CBDCs
According to Yifan He, founder of Chinese blockchain firm Red Date Technology, Trump’s decision could significantly hinder any retail CBDC projects over the next four years. However, He remains skeptical about the feasibility of fully operational retail CBDCs in the near future. “I don’t think any country can even develop a real retail CBDC in the next 10 years,” he remarked.
Meanwhile, the development of wholesale CBDCs appears to be gaining traction. Lambis Dionysopoulos, a researcher at the EU Blockchain Observatory and Forum, noted that wholesale CBDCs are being taken more seriously as they present an alternative to the US-controlled financial system.
Countries like Russia have expressed concerns about their dependence on US-dominated financial infrastructure, which Dionysopoulos says leaves them vulnerable to being cut off at the “press of a button.” European Central Bank President Christine Lagarde has also emphasized that a digital euro is crucial for Europe’s financial autonomy and security.
Opportunities for Non-US CBDC Development
Trump’s stance on CBDCs, coupled with ongoing geopolitical tensions, could accelerate cross-border and wholesale CBDC initiatives, particularly in countries with strained relationships with the US. Dionysopoulos suggested that global CBDC development may thrive in regions aiming to reduce reliance on US financial influence.
In contrast, the US has shown little interest in CBDCs, whether retail or wholesale. While some critics argue that CBDCs are fundamentally flawed, others believe the global push for CBDCs remains strong.
Commitment to CBDCs in Other Regions
Tomer Warschauer Nuni of Kima Network highlighted that countries like China, Israel, Australia, and members of the European Union are still committed to advancing CBDC projects. The European Union, in particular, views the digital euro as a step toward strategic payment autonomy and reduced reliance on non-European systems.
Nuni added that the development of CBDCs also presents an opportunity to build interoperability between centralized and decentralized financial ecosystems, ensuring a resilient global financial system.
Despite the US ban, the future of CBDCs remains a key focus for many nations, with wholesale and cross-border initiatives likely to dominate discussions in the coming years.