As India embarks on its e-rupee journey, central banks of other countries are not behind and have kicked off plans for their own digital currencies to help people invest in safer instruments and not fall for highly volatile cryptocurrencies like Bitcoin.
Over 100 countries, including India, are exploring or piloting Central Bank Digital Currencies (CBDCs), a digital form of a country's sovereign currency.
Among the G20 countries, 19 are exploring a CBDC, with 16 already in the development or pilot stage. They include South Korea, Japan, India and Russia, according to The Atlantic Council's Geoeconomic Centre.
US President Joe Biden's administration this year issued a new executive order to regulate cryptocurrencies, asking regulators to ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets.
The executive order also directed the government to assess the technological infrastructure and capacity needs for a potential US CBDC in a manner that protects the consumers' interests.
The Reserve Bank of Australia (RBA) had announced in August that it has embarked on a project to explore the potential uses for a federally-backed digital currency.
The RBA said that, in collaboration with the Digital Finance Cooperative Research Centre (DFCRC), it would run a year-long, limited-scale trial of a CBDC.
Andreas Furche, CEO of the DFCRC, said the technology for a digital currency already existed and rather the project was about understanding how a CBDC could help Australia.
"The key research questions now are what economic benefits a CBDC could enable, and how it could be designed to maximize those benefits," he said.
The Bank of Korea (BOK) had announced earlier this year that it successfully completed its first phase of a two-step mock test of the feasibility of a CBDC as it is reviewing whether to introduce the potential new form of money.
"We will confirm the possibility of operating various functions, such as offline settlements, and the application of new technologies, such as one intended to strengthen privacy protection during the second phase of the test," the BOK had said in a statement.
Global central banks have been speeding up their research on digital currencies to brace for a fall in demand for cash and the emergence of cryptocurrencies in the private sector.
Central banks in some Latin American countries and African countries have started to issue CBDCs.
China has been pushing to issue a CBDC this year, possibly making itself the first major economy using the new form of currency, while the US Federal Reserve reportedly launched a review of its potential benefits.
Kenya's apex bank also said it was examining the possibility of creating a CBDC in response to accelerated adoption of various digital payments in the country.
Twenty per cent of large organisations globally will use digital currencies for payments, stored value or collateral by 2024, according to a recent Gartner report.
The prediction for wider adoption of digital currencies by 2024 is partly driven by the already healthy environment of service providers and off-the-shelf solutions available to large enterprises that have identified a specific use case for digital currencies.
"Increasing mainstream acceptance of cryptocurrencies on traditional payment platforms and the rise of CBDCs will push many large enterprises to incorporate digital currencies into their applications in the coming years," said Avivah Litan, distinguished vice president analyst in the Gartner IT practice.