Central bank digital currencies (CBDCs) have been a trending topic worldwide, with over 100 central banks exploring the possibility of developing their own digital currencies. The Republic of Belarus is the latest country to join the race, but instead of rushing to the forefront, its policymakers are taking a cautious approach, eagerly watching and learning from the mistakes of its forerunners.
Republic of Belarus’s Approach to CBDC Development
According to a report, Belarus is taking a cautious approach to the development of CBDCs as they recognize that it can significantly change the country’s monetary landscape. Therefore, they are preparing for their launch by gradually making changes to taxation, banking, and budget legislation. Additionally, the central bank plans to carry out multiple pilots involving commercial banks and individuals while focusing on its use in cross-border payments.
Cross-border payments are where these technologies would be most beneficial for the country according to the Chairman of the Board of the National Bank of Belarus, Pavel Kallaur. He explained that if other countries do greenlight their adoption of digital currencies, the nation must be prepared to integrate the same into its systems to ensure that its citizens and legal entities can truly benefit from the advanced services it offers.
Belarus is also keeping an eye on Russia’s development of a CBDC, as their decisions will have a massive effect on Belarus. Russia’s plans for a digital ruble have been fast-paced so far, fueled by the immediate need to circumvent Western sanctions due to its instigation of the war with Ukraine, with plans to launch before the end of 2023.
Present Status of the Belarus CBDC Plans
Kallaur disclosed that the bank is keeping a close eye on the development of CBDCs in the ecosystem. The central bank official emphasized that CBDCs have the functionalities of cash and can be used in both online and offline scenarios, which is not at all that different from non-cash money. With the increasing interest in CBDCs, the National Bank has allowed initial experimentation with it to proceed.
To support early probing into the viability of CBDCs, the central bank confirmed that it had already started the process of developing a demo version. A decision will be made as to whether or not to implement a digital ruble in Belarus by the end of the year after thorough discussions and consultations about the subject matter.
Other Nations Opting for Safe Measures in CBDC Adoption
While over 100 central banks worldwide are exploring the development of CBDCs, some nations are choosing a cautious approach. India, for instance, is playing it safe with CBDCs and being cautious about the risks, especially following a failed digital rupee launch. In the same vein, Israel’s central bank stated earlier that it will keep a watchful eye on the CBDC developments of global powers, particularly the European Union and the United States, while also remaining observant on the rise of stablecoins and the decline in cash transactions in its bid to roll out the digital Shekel.
It is worth noting that the introduction of CBDCs can significantly alter a country’s monetary landscape, making it crucial for central banks to consider the implications and risks associated with such technologies. Therefore, it is of utmost importance to adopt a careful approach to CBDC development, as seen in the Republic of Belarus.
Ultimately, the success of CBDCs will depend on the adoption by individuals, businesses, and governments, and how central banks manage the risks associated with the introduction of such technologies.
Giancarlo is an economist and researcher by profession. Prior to his addition to Blockzeit’s dynamic team, he was handling several crypto projects for both the government and private sectors as a Project Manager of a consultancy firm.