By now you’ve likely heard of Central Bank Digital Currencies (CBDCs). With consumers’ lives taking place increasingly online and the recent boost in cryptocurrency usage and value, much of the global economy is ready to move from discussing CBDCs to formally implementing a CBDC strategy.

But though there has been some progress in this area, there is still a lot of confusion in the broader banking and fintech community. If you’re feeling a bit behind on the CBDC discussion, here are five things to know that can help you catch up:

Six countries are currently piloting CBDCs

While much of the world is struggling to wrap their heads around CBDCs, some countries are ahead of the game and already have pilot programs in place. Of these, the most well-known is China, but Thailand, the Republic of Korea, Ukraine, Sweden, and Uruguay are also actively piloting CBDCs. Additionally, Brazil reports it plans to formally launch its CBDC next year.

A handful of countries, including Canada, Venezuela, Cambodia, South Africa, and the UAE have made key developments with their CBDC programs.

Other countries are still in the research phase or have had no development.

Check out this interactive map from the Atlantic Council to learn more about each country’s progress.

CBDCs don’t necessarily need the blockchain

Many people associate CBDCs with Bitcoin, which can be a helpful way to think of distinguishing Central Bank currencies from fiat money in digital form. But while Bitcoin leverages the blockchain, CBDCs don’t necessarily need to.

That’s because blockchains are used when there is no central party to provide trust. When central banks serve as the trustworthy authority, however, this decentralization is no longer necessary.

In fact, according to a survey conducted last February by the U.K.’s Central Banking Magazine, only one reserve bank said that they planned to use a blockchain for the structure of distributing their CBDC.

There are two types of CBDCs

Many people don’t know this, but there are actually two types of CBDCs– wholesale and retail. Wholesale CBDCs facilitate clearing operations between the central bank and its member banks, while retail CBDCs are for the general public to use, taking the place of the bank note.

There will still be room for cash

CBDCs will work alongside cash, or fiat currency. While there are both negative and positive aspects to paper money and coins, there will still be a cash economy. CBDCs simply combine the convenience of a cryptocurrency with the stability and regulation of fiat currency.

CBDCs won’t harm banks

As Chris Skinner highlighted in a blog post recently, CBDCs have the potential to disrupt banks to the point making them obsolete. Because CBDCs are issued digitally, they could technically circumvent banks.

Skinner concludes, however, “The true role of banks, whether in a digital currency or cryptocurrency world, is to store and exchange value with trust. That’s why they’re regulated the way they are and why they exist the way they do. And that isn’t going away anytime soon.”

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Though we’re only four weeks into it, 2021 has been a big year for cryptocurrency. While there has been a multitude of news items in the crypto space, there are a handful of items worth highlighting.

Though much of the cryptocurrency news cycle is often quite hyped, it’s important for the traditional financial sector to keep their finger on the pulse of major news pieces in this space, especially as the decentralized finance trend takes off. That said, here are six things you need to know about what’s going on in the cryptocurrency realm:

Elon Musk stands bullish on Bitcoin

The price of Bitcoin hit an all-time high at the beginning of January of this year. A few weeks later, during an interview on Clubhouse, Tesla CEO Elon Musk said, “I do at this point think bitcoin is a good thing. I’m late to the party, but I am a supporter of bitcoin.”

This vote of confidence for the popular cryptocurrency didn’t send the price of bitcoin to the same highs that we saw on January 8. It did, however, offer it a nice boost in price and a stamp of approval that will be beneficial in boosting the cryptocurrency’s legitimacy.

Ethereum hits all-time high

The price of Ethereum reached an all-time high today, this time breaking the $1,600 mark. Fueling the surge is the pending launch of ethereum futures on the Chicago Mercantile Exchange next week.

While bullish buyers expect to see the price top out around $2,000, others anticipate it will level off.

The Indian government dances around a cryptocurrency ban

India is notorious for its hot/cold relationship with cryptocurrency. In 2018, the country’s central bank banned offering banking services for digital asset firms, but the Supreme Court overturned that ruling last year.

This week, the Indian government revealed that it will likely seek to regulate cryptocurrency, instead of ban it.

Visa announced plans to enable cryptocurrencies trading on its network

In an earnings call, Visa CEO Alfred Kelly said that he wants to make cryptocurrencies “more useful and applicable for payments.” To accomplish this, Kelly sees Visa working with wallets and exchanges to enable users to purchase cryptocurrencies using their Visa card or to cash out onto a Visa card to make a fiat purchase at a traditional merchant.

During the call, Kelly disclosed that the payments giant is already working with a handful of digital currency platforms and wallet providers to serve as their card issuer. This list includes crypto.com, Blockfi, Fold, and Bitpanda.

The OCC OK’d stablecoins

In the first week in January, U.S. Office of the Comptroller of the Currency (OCC) last week published Interpretive Letter 1174 detailing that banks may use stablecoins and independent node verification networks (INVNs) to facilitate payments for customers. Simply put, banks can transfer stablecoins to other banks.

This development happened under the watch of Acting Comptroller of the Currency Brian Brooks, who stepped down mid-last month. Taking Brooks’ place is Blake Paulson, whose attitude toward cryptocurrencies is untested.

Gemini began offering a savings account

Cryptocurrency exchange Gemini is starting to step on traditional banks’ toes. That’s because the New York-based company is launching a savings account called Earn that allows users to move their crypto holdings into high-yield savings paying as high as 7.4%.

Thanks to Gemini’s business model, it can afford to pay the high rate. That’s because it lends users’ cryptocurrency deposits to other borrowers through its partner, Genesis Global Capital, at a higher interest rate.

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The U.S. government has approved a second round of Paycheck Protection Program (PPP) loans. The Consolidated Appropriations Act of 2021, which was signed into law late last year, is the second stimulus package, following the passage of the CARES Act in March of last year.

The second round of PPP loans, or PPP2, provides $284 billion in aid to small businesses suffering because of the pandemic. With PPP2, there are a few key differences from the first iteration. Here’s what you need to know:

Eligibility has changed

Unlike the first round, some 501(c)(6) not-for-profit organizations that have fewer than 300 employees may be eligible for funds if they meet limited lobbying requirements.

Businesses may qualify for a second loan

Businesses are eligible for a second PPP loan of up to $2 million if they have used up their first loan, have fewer than 300 employees, and experienced quarterly revenue declines of 25% in 2020 compared to the same quarter in 2019.

Additional expenses are covered

The first round of PPP stipulated that funds had to be used toward payroll, rent, mortgage, and utilities in order to qualify for forgiveness. PPP2 has added a few categories to that list, including operational expenditures, payments to suppliers, property damage costs resulting from public disturbances, and costs associated with protecting employees.

More time to use funds

The “covered period,” or the time the business was required to use the funds in order to qualify for forgiveness, was originally eight weeks. It was later amended to allow borrowers to chose a 24 week period. Under PPP2, borrowers have more options– they can choose any covered period between eight and 24 weeks.

Is it enough?

According to Greg Ott, CEO of Nav, a platform that matches small businesses with lenders, PPP2 is a “much-needed” improvement, but still falls short for some small businesses.

“The primary reasons for this,” he explains, “include the fact that the burden of navigating the complex and intimidating application process is too heavy for most small business owners struggling to survive day-to-day, the bill itself is written by people who don’t genuinely understand what these businesses need, and the traditional banking system simply isn’t set up to prioritize truly small businesses.”

“The new funds are certainly welcome, but it will unfortunately be too little and too late for many business owners,” Ott added.

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