Global Push for Digital Currencies
Why CBDCs Are Gaining Traction
Central Bank Digital Currencies (CBDCs) are reshaping the financial landscape in 2025, with over 130 countries, representing 98% of global GDP, exploring or developing them. Unlike cryptocurrencies, CBDCs are government-backed digital versions of fiat currencies, offering stability and trust. The race, reported on June 19, 2025, stems from the need to modernize payments, counter private digital currencies like Bitcoin, and enhance financial inclusion, particularly in emerging markets like Thailand.
Leaders in the CBDC Race
China and Thailand Take the Lead
China’s digital yuan, piloted since 2020, leads with over 1.8 billion transactions worth $350 billion by mid-2025. Thailand’s digital baht, tested in sandbox environments, aims to streamline cross-border payments with ASEAN neighbors, reducing costs by 30%. Sweden’s e-krona and the Bahamas’ Sand Dollar are also operational, focusing on cashless societies and remote island transactions. These frontrunners demonstrate CBDCs’ potential to boost efficiency and economic resilience.
Technological Foundations
Blockchain and Beyond
Most CBDCs leverage distributed ledger technology (DLT), like blockchain, for secure, transparent transactions. Thailand’s Project Inthanon uses Hyperledger Fabric, ensuring scalability for 10,000 transactions per second. Some nations, like the ECB’s digital euro, explore centralized systems for tighter control. Interoperability is key, with initiatives like mBridge linking CBDCs across China, Thailand, and UAE, cutting remittance times from days to seconds while maintaining anti-money laundering compliance.
Economic and Policy Implications
Balancing Innovation and Stability
CBDCs promise faster, cheaper transactions—Thailand’s digital baht could save $2 billion annually in remittance fees—but raise concerns about bank disintermediation. If consumers shift deposits to CBDC wallets, commercial banks may face a 20% lending capacity drop, per IMF estimates. Central banks are designing tiered systems, limiting individual holdings (e.g., 10,000 baht in Thailand) to mitigate risks. Privacy is another hurdle, with China’s traceable CBDC sparking debates over surveillance versus fraud prevention.
Geopolitical Stakes
Currency Dominance in Play
The CBDC race reflects geopolitical ambitions. China’s digital yuan aims to reduce dollar reliance, with 15% of its Belt and Road transactions now CBDC-based. The US, lagging with no live CBDC, risks losing influence as 70% of global trade still uses dollars. Thailand, balancing ties with both powers, uses its digital baht to strengthen ASEAN trade, positioning itself as a regional fintech hub. CBDCs could shift global financial power, challenging SWIFT’s dominance.
Challenges and Risks
Cybersecurity and Adoption Hurdles
Cybersecurity is critical, as CBDC hacks could destabilize economies. Thailand’s central bank invests $200 million in quantum-resistant encryption for its digital baht. Adoption also poses challenges—30% of rural Thais lack digital literacy, per 2025 surveys. Pilot programs, like distributing free CBDC wallets in Chiang Rai, aim to bridge this gap. Regulatory harmonization across borders remains elusive, with G20 talks ongoing to standardize AML and KYC protocols.
Future of Money
CBDCs Reshape Global Finance
By 2030, the BIS predicts 24 live CBDCs, handling 20% of global payments. Thailand’s digital baht, set for full rollout in 2026, could boost GDP by 1.5% through lower transaction costs and increased financial inclusion. As central banks refine designs—balancing privacy, stability, and innovation—CBDCs will redefine money, challenging traditional banking and geopolitics. Investors and businesses must adapt to this digital shift, leveraging platforms like SCB Easy to engage with emerging systems.
