Central Banks Digital Currency: Detection of Optimal Countries for the Implementation of a CBDC and the Implication for Payment Industry Open Innovation

TLDR

Central Bank Digital Currencies are digital currencies issued by central banks, and several jurisdictions—including the Bahamas, China, and Uruguay—are actively exploring or piloting them. The authors identified candidate countries, coded motives for CBDC adoption into variables, and applied Pearson, Spearman, and Kendall correlation analyses to rank countries by similarity to the pioneering Bahamas, China, and Uruguay. The analysis indicates that Lithuania, Estonia, and Finland form the most promising European region, while Uruguay and Brazil are strong candidates in South America, Malaysia aligns with China in Asia, and South Africa emerges as the leading African option.

Abstract

This article analyzes the current situation of Central Bank Digital Currencies (CBDCs), which are digital currencies backed by a central bank. It introduces their current status, and how several countries and currency areas are considering their implementation, following in the footsteps of the Bahamas (which has already implemented them in its territory), China (which has already completed two pilot tests) and Uruguay (which has completed a pilot test). First, the sample of potential candidate countries for establishing a CBDC was selected. Second, the motives for implementing a CBDC were collected, and variables were assigned to these motives. Once the two previous steps had been completed, bivariate correlation statistical methods were applied (Pearson, Spearman and Kendall correlation), obtaining a sample of the countries with the highest correlation with the Bahamas, China, and Uruguay. The results obtained show that the Baltic Sea area (Lithuania, Estonia, and Finland) is configured within Europe as an optimal area for implementing a CBDC. In South America, Uruguay (already included in the comparison) and Brazil show very positive results. In the case of Asia, together with China, Malaysia also shows a high correlation with the three pioneer countries, and finally, on the African continent, South Africa is the country that stands out as the most optimal area for implementing a CBDC.