Central Bank Digital Currencies (CBDCs) have been an integral part of progressive discussions within the cryptocurrency community. CBDCs are virtual representations of the fiat currency of a particular country. They are often based on blockchain technology and are issued and regulated by the country’s official monetary organization. The feature that makes them different from cryptocurrencies such as Bitcoin and Ether is that CBDCs are backed by the central bank’s deposits of the country’s currency and regulated by the central bank, while cryptocurrencies are not.

Cointelegraph discussed with Thomas Trepanier, Director of Business Development for Roxe at Apifiny, a digital platform for financial institutions, the role that CBDCs could play in the global economy. He thought:

“CBDCs enable central banks to provide greater financial inclusion, especially in markets that are struggling to compete globally. CBDCs also eliminate inefficient processes and promote better local and global transparency, especially given the importance of KYC compliance. “

The first CBDC to be officially launched is the Bahaman Sand Dollar issued by the Central Bank of Bahamas on which it was launched 21st of October. The Sand Dollar is a state-backed currency pegged to the Bahamian dollar, which in turn is pegged to the US dollar. According to the official website, Bahamian citizens can use this sand dollar as payment to any merchant with a central bank-approved e-wallet on their mobile device, while the transaction fee is negligible. This property makes the sand dollar a retail CBDC compared to wholesale CBDCs that are tailor-made for the use of financial institutions. NZIA is the central bank’s chosen technology solutions provider to manage the digital currency’s operations.

CoinTelegraph discussed with a representative of the Bahamas central bank, who outlined how as retail CBDC achieve their goal:

“A core objective of Project Sand Dollar is to promote more inclusive access to regulated payments and other financial services for communities without and with few banks and socio-economic groups in the country. As a retail CBDC, Sand Dollar enables us to achieve this goal. ”

Although the Sand Dollar was launched more than 2 months ago, the currency usage in the financial system is not clear. According to an official press releasethe first phase focuses on the private sector, while the second phase, starting in 2021, focuses on government services and public utilities.

While the Sand Dollar is the first CBDC to be officially launched, there are many countries running pilot CBDC programs or active discussions about the introduction of CBDCs, but CoinTelegraph identifies the first 5 CBDCs that could be launched in 2021 and 2022. China’s digital yuan, the digital euro project, the Swedish e-krona, the digital currency of Thailand and the digital currency of Australia.