The COVID-19 pandemic has created many different socioeconomic challenges. It has definitely been a really tough year for the travel and tourism industry as most people were forced to cancel their travelling plans and stay at home (to prevent the further spread of the virus).
But there are some developments that have accelerated during the Coronavirus crisis. As covered extensively, developments related to CBDCs have “accelerated dramatically” during the past 18 months (even before the pandemic began).
Rosa Giovanna Barresi, a lawyer and the Co-Founder of the LawTechTeam, notes that popular tourist countries are beginning to take more interest in central bank digital currencies (CBDCs).
While sharing a list of the reserve banks that may be working on a CBDC, Barresi clarified that some declarations by an institution might not have “a real follow-up.” That’s because they might decide to not launch their own virtual currency.
Some of the countries that serve as popular tourist destinations and are also considering launching their own CBDC include:
- Bank Of The Republic Of Haiti
- Bank of Jamaica (only a declaration of interest so far)
- Banky Foiben’i Madagasikara (Madagascar) – e-Ariary (just a declaration of interest)
- Bank of Marshall Islands – (Sovereign SOV launched on the Algorand blockchain network)
- Bank of Mauritius (simply a declaration of interest)
The reserve banks of Thailand (Project Ithanon-Lionrock – ConsenSys), the Bahamas (Sand Dollar – NZIA Limited), Curaçao and Sint Maarten, Seychelles, Trinidad e Tobago, and the Eastern Caribbean have all considered launching their own CBDCs.
(Note: for a complete list of tourism-focused countries interested in launching their CBDCs, check here.)
As noted by Barresi, CBDCs can help with “lowering circulation costs (just think about the costs of moving money across islands).” She also mentioned that “in order to enter the CBDC ecosystem, a tourist would need to pay a one-time fee (for covering fixed expenses, like the use of a Digital Wallet) and will execute at least two FX transactions, one to change his currency into the local one and another to change it back.” She explained that “the exchange rates for these two transactions could easily be controlled by the Central Bank, instead of the credit card provider. And paying by CBDC, as paying in plastic, makes very difficult to control your daily expenses.”
She added:
“Compared to these benefits, the costs of establishing a tourist-oriented CBDC payment system are low. Requirements for such a small-scale economy are easy to meet, both in transaction number and response time. Another reason of interest is the opportunity to enhance the evolution of the financial sector, both at onshore and offshore level.”
China appears to have taken the lead when it comes to developing and issuing its own CBDC. The country has already launched digital currency testing pilots in several major Chinese cities such as Shanghai and Shenzhen (among other locations). China has also given away over a million dollars worth of its digital currency to consumers and businesses that have taken part in its virtual currency pilot programs.
The US government is also working on a digital version of the US dollar. Most of the world’s developed countries have announced that they’re exploring the feasibility of offering a CBDC.
In a recent interview with Crowdfund Insider, Dave Hodgson, CIO at NEM Group, noted:
“Central bank digital currencies (CBDCs) is a particular area of focus, with the LBCoin pilot CBDC issued by the Central Bank of Lithuania in July using a combination of NEM NIS1 and NEM Symbol Private Chain.”
He added:
“Since the issuance of the world’s first CBDC on a public blockchain network by the Central Bank of Lithuania, we have received a significant amount of interest from multiple state central banks. In short, we intend to be active in the space and one of a small number of chains that can support a CBDC on either Private or Public chain. We are also investigating the possibility for cross-chain CBDC transactions with solutions that are based on other technologies.”