Two of their respective regions’ most powerful economies are moving closer to the issuance of Central Bank Digital Currencies or CBDCs. In India, Reserve Bank of India deputy governor Shri T. Rabi Sanker said that the bank is working toward a “phased implementation strategy” that would further the country’s multi-year effort to transition its citizens away from cash. India’s efforts to remove cash from the economy, including innovations like the Unified Payments Interface (UPI) and the RuPay network have become increasingly accepted by Indian citizens. But both, as far as Sanker are concerned, face challenges from the persistence of cash and the promise of CBDCs.
With regard to the latter, Sanker has encouraged observers to envision a UPI system based on CBDCs rather than bank balances. In such a framework, there would be no need for interbank settlement and payment systems worldwide could benefit from greater cost efficiencies and faster, even real-time, transaction settlement. As far as the persistence of cash is concerned, small value transactions still make up most cash purchases in the country. But even here Sanker believes that with certain guarantees like transaction anonymity, CBDCs could be efficiently used for these transactions, as well.
Meanwhile in Africa, Rakiya Mohammed, Formation Technology Director for the Central Bank of Nigeria (CBN) told an audience recently that the country will launch its CBDC pilot on the first of October. The project, called Giant, has been in development since 2017 and runs on the open source blockchain Hyperledger fabric. The bank hopes that a CBDC will help support macro and growth management – as well as cross-border trade – and facilitate financial inclusion. Mohammed reportedly cited FOMO – fear of missing out – as one reason why the CBN could not risk sitting on the sidelines while other central banks around the world launched CBDC-related projects and initiatives.
The demand for CBDCs remains an open question to some degree. But proponents of the technology can take heart in a recent study conducted by European deep tech company Guardtime. The firm took a look at opinions toward CBDCs in ten countries including countries in Europe and Asia, as well as in the United States and the UAE. The study revealed that a majority of adults (64%) said that they would be likely to use a digital currency offered by their country’s central bank, with 33% saying they would be “very likely” to use a CBDC. Only 10% of respondents said they would “never” use a CBDC. The CBDC favorable position maintained a healthy lead over CBDC rejection both when it came to converting savings to CBDCs (59% support versus 11% “never”) and being paid in CBDCs (57% support versus 12% “never”).
Summing up the positive results for CBDCs suggested by the study, Guardtime Head of Strategy Luukas Ilves observed, “it is fascinating to see that 64% of people would be willing to use CBDCs – even though they have not been launched yet – and are happy to support and trust Central Banks to ensure digital currencies are delivered.”
Here is our look at fintech innovation around the world.
Middle East and Northern Africa
- Israel-based fintech Gefen raised $18 million (A$25 million) at a $92 million (A$128 million) valuation in its debut on the Australian Securities Exchange this week.
- Egyptian fintech Hollydesk will receive a “six figure” financing under $1 million by the end of July according to CEO Mahmoud Moussa.
- UAE-based personal financial assistant mobile app Lune launched in a bid to improve financial literacy among youth in the Middle East.
Central and Southern Asia
- Neobank, the first digital bank in Pakistan, is pursuing funding from investors in Australia.
- Fintech News Singapore took a look at the top ten Buy Now Pay Later firms in India.
- Karachi, Pakistan-based fintech DigiKhata raised $2 million in seed funding to help micro- and small businesses manage their finances.
Latin America and the Caribbean
- Entrepreneur looked at the way fintechs are challenging traditional banks in Mexico.
- BNAmericas provided an overview of fintech funding in Latin America in the first half of 2021.
- Millicom CEO Mauricio Ramos and Panamanian President Laurentino Cortizo Cohen discussed technology investment and the creation of a fintech hub.
- Singapore-based startup Thunes acquires European payments platform Limonetik.
- IBS Intelligence looked at three Cambodian fintech startups that are “disrupting the nation’s financial sector.”
- Indonesian fintech Xendit announced an investment in DragonPay, a payment platform based in the Philippines.
- Less than a month after earning the country’s first digital stock trading license, Nigeria’s Chaka secured $1.5 million in pre-seed funding.
- MFS Africa announced its expansion into Sierra Leone.
- Kenyan mobile payments company M-Kopa announced plans to enter the Nigerian market.
Central and Eastern Europe
- Bulgaria’s First Investment Bank announced that its customers can now digitize their Visa credit and debit cards by using Google Pay.
- Paysera earned accreditation in Ukraine from the country’s national bank.
- IDenfy, an identity verification company based in Lithuania, partnered with Polish fintech Payment Financial.