The increasing use and adoption of cryptocurrencies - as a way to move money within and between nation states by individuals- has resulted in several countries banning (at some point in time) cryptocurrency, cryptocurrency businesses, ICOs and cryptocurrency mining farms, only to later reverse their decisions (eg. China, Russia, Korea, Japan).
National digital currencies have now caught the eye of governments who are exploring their adoption. Digital decentralized currency is commonly referred to as Central Bank Digital Currency (CBDC) which is just a digital version of their fiat not using a blockchain.
In February 2019 the Bank of International Settlements (BIS) surveyed 63 countries central banks regarding CBDCs, a surprising 70% of central banks surveyed stated they are currently researching the issuance of a CBDC.
Here is a summary of centralized cryptocurrency coins introduced by various countries or by countries researching centralized coins.
Centralized Cryptocurrencies Introduced By Various Countries:
China
China is creating its own blockchain-based digital currency the “digital yuan”. China’s version could replace its paper fiat completely.
Cyprus
Cyprus introduced its Aphroditecoin following the banking crisis of early 2013.
Greece
Greece, launched its GreeceCoin in March 2014 promoting its use by citizens and businesses in the country. The peer to peer crypto currency project however now appears to be defunct.
Iran
After US trade sanctions Iran announced it will issue its own cryptocurrency pegged to the Rial its official national fiat currency. The Iranian President Hassan Rouhani stated that the Muslim world needs its own cryptocurrency to fight against the economic dominance of the US dollar and the American financial regime. The Central Bank of Iran (CBI) drafted new rules concerning cryptocurrencies, reversing a previous ban to signal adoption of their centralized currency. Despite the recent moves there are still restrictions on the use and trade of decentralized digital currencies in the country.
Japan
Japanese banks are planning to introduce a digital currency in conjunction with the 2020 Tokyo Olympics. The J Coin will be used to pay for goods and transfer digital money using smartphones.
Marshall Islands
Is issuing the Sovereign (SOV) intended to become the Republic’s legal tender similar to the US dollar. The country initiated the SOV to raise cash to pay bills and give a boost to the economy.
Peru
Peru issued its own country coin called the PeruCoin based on the Ethereum blockchain. PeruCoin was introduced to encourage the adoption of cryptocurrencies in the country. There does not seem to be much interest by the population to adopt the centralized coin.
Russia
Issuing its own digital currency is inevitable, given the US imposed sanctions said Russia’s Finance Minister. Russia has been working on its “Cryptoruble” since 2016 and announced the Cryptruble (or Bitruble) in Oct. 2017. The value of the CryptoRuble is identical to the value of a regular ruble.
Singapore
In 2017 Singapore’s central bank announced its intention to adopt a digital version of the Singapore Dollar (SGD). Its digital currency, would be run on the Ethereum blockchain. Since the initial announcement there has been little news of the digital SGD.
Venezeula
In Venezuela poorly implemented socialist policies along with US Sanctions and cratered oil prices have devastated the economy. In Venezuela some people have turned to using Bitcoin as a way to shield themselves from inflation and protect their store of wealth. Cryptos also allow for transfer of money across borders. US sanctions resulted in the introduction of The Petro (PTR) in December of 2017, as a way to bolster the Venezuelan Bolivar (VEF) and to overcome the sanctions. The Petro is backed by oil, gas, gold and diamonds.
Tunisia
In 2015, Tunisia was the first country in the world to issue an official centralized state-backed digital currency called the e-Dinar.
United Arab Emirates
In January 2019 the United Arab Emirates Central Bank (UAECB) its digital currency project called the ‘Aber’ which will be used to settle financial transactions digitally between the UAE and Saudi Arabia. Dubai previous announced its own CBDC called Encash (and Emcredit) in October 2017. EnCash is targeted to become an official payment option for government and non-government services in Dubai.
Other Countries Initiating Research Into Centralized Coins:
Canada
The bank of Canada began research on a CBDC in 32016. There are no formal plans for issuing a CBDC yet.
Sweden
Sweden’s central bank has given a contract to Accenture to build its digital currency pilot project. The Riksbank announced that the partnership will work on the centralized currency, the e-krona.
The Bahamas
In June 2018 the Central Bank of The Bahamas announced its pilot cryptocurrency initiative, "Project Sand Dollar."
The Netherlands
The Dutch Central Bank (DNB) is exploring the idea of a digital currency. DNB acknowledges the potential benefits of digital currency but also sees potential problems and a lack of infrastructure.
United States
The US doesn’t have plans for a national cryptocurrency but at the end of 2019 there were 21 bills that had been introduced to the US Congress addressing cryptocurrency and blockchain policy, which may be considered for adoption in 2020.
Conclusion
In just a few years the list of countries either issuing or considering issuing a centralized cryptocurrency to be used along side or to fully replace paper currency has increased significantly. Countries that once banned cryptocurrencies like China and Russia are now embracing a centralized version.
One of the main criteria for decentralized digital currencies require that they be free from government manipulation and control. Decentralized currency has no central governance. Individual nodes can go down but the rest of the network will keep the work up and running without interruptions. Secondly, there is no central point of control and failure so there is no censorship. Digital funds can’t be withheld. Third, there is no single point of regulation where exchange shut downs by government regulators could lead to a loss of funds. And finally, decentralized currency and exchanges empower users to control their own keys, and provides a degree of privacy.
It is clear that national digital currencies fail to meet the decentralized criteria. Countries are eager to adopt centralized currency to increase financial transaction efficiency and eliminate black markets.
A more practical reason is for easier monitoring and mass control of the population. Get on the wrong side of the government, participate in a rally opposing government policies and watch them freeze your digital assets with the push of a button. So it comes as no surprise that more totalitarian and socialist governments (eg. China, Russia, Iran, Venezuela) are the first movers ahead of other countries to rush issuing state cryptocurrencies.
In the future combine mass CCTV surveillance with Artificial Intelligence facial recognition capabilities in an internet of all things city and state control over individuals and dissidents could be implemented. It would be like a stranglehold as people would fear their funds to buy food and other essentials could be frozen at the discretion of government. Economic sanctions work on nations as well as its citizen's. It is a dystopian view that hopefully will not come to pass.
Yet another reason for adoption of a national cryptocurrency is the move to further weaken the US dollar as the world reserve currency since digital currencies would allow for settlement bypassing the US dollar. Brazil, Russia, India, China and South Africa, or the BRICS economic bloc are already in discussions to create a shared digital coin to bypass the USD and SWIFT. Vladamir Putin seems particularly keen on fast-tracking centralized cryptocurrencies that will bypass US sanctions and the USD reserve currency with the Russian cryptoruble, the BRICs coin and a shared digital coin with eastern block countries.
