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Today, we’re on the precipice of what could be the largest transformational period in global history. Marking a new era, blockchain-based digitalization is and will change how we all transact – specifically impacting a massive industry ripe for disruption: finance.

Digital finance and the monetary system is leveraging decentralized blockchain technology to modernize financial markets. Dominant players in these systems include the world’s biggest financial institutions and global central banks.

Digital currencies & CBDCs

As tokenization is an inevitable trend, Central Bank Digital Currencies (CBDC) are surging in adoption, since they are simply one kind of a more generalized digital asset, albeit one that is bound to risk-free central bank money. The adoption of CBDCs will drive significant Decentralized Ledger Technology (DLT) ecosystem innovation and development that will impact financial organizations. The widespread adoption of DLT will extend beyond finance to other industry verticals like security, supply chains, healthcare, retail and ecommerce.

CBDCs will certainly make payments, settlement of deals and trading simpler, especially when it comes to global trade. It will also potentially change the role current institutions are playing regarding money and payments. CBDC implementation will also possibly make cross border payments simpler and much cheaper. One result of that will be the enablement of micropayments, allowing small businesses to be more competitive and eliminate the need for aggregators in order to make them economically viable, resulting in a different distribution of value.

Winners and losers are made from historic periods of societal shifts and advancements. As the world embarks on a new transformational journey, who is driving it?

The three horses in this race

Huw van Steenis of UBS said there will be a “three-horse race” around the future of money with private tokens and CBDCs developing in parallel with efforts to improve the current system. The implications of winning or losing the digital finance “arms race” are massive and far-reaching.

According to the latest survey conducted by the Bank for International Settlements (BIS) on central banks in 65 countries or economies, about 86 percent have carried out researches on digital currencies. Meanwhile, the proportion of central banks that were performing experiments or developing a proof-of-concept prototype increased from 42 percent in 2019 to 60 percent in 2020. Central banks of the US, the UK, France, Canada, Sweden, Japan, Russia, Korea and Singapore as well as the European Central Bank have all disclosed their considerations and plans regarding CBDC in various ways. Some central banks have initiated or even completed preliminary trials. But, it’s China, the U.S and the EU that are really doubling down.


China’s aggressive CBDC program began testing live in 2019 – allowing people in a variety of provinces to send money to each other by simply touching their smartphones together. Across China, more than 20.8 million individuals have opened a virtual wallet that stores the digital currency and have made more than 70.7 million transactions totaling $5.3 billion in value as the People’s Bank of China said in a white paper published this July. Last month digital yuan was also used by the Dalian Commodity Exchange to pay for storage charges in a local warehouse, marking the first time that the sovereign digital currency has been applied in the futures market.

The most recent and, potentially, the most critical development in China’s efforts to bolster the Digital Yuan is its complete crackdown on all cryptocurrency transactions. Making any crypto-related activity illegal (thus punishable under law) clears the way for Digital Yuan to take crypto’s place in China.

Regardless, China is creating a significant advantage in this global race on CBDCs by investing in the technology and experimenting at a very fast pace. The country has made the digital Yuan a public priority, and it has an ambitious goal of becoming a Blockchain world leader by 2025.

Combined with its unique political structure, China is able to move faster than the US or Europe in implementing such changes.


Europe is in a strong position to create a CBDC, but unlike attempts by smaller, individual countries like Sweden, the size and scale of an EU digital currency would be sustainable long-term and could compete at scale. This July, the European Central Bank has formally launched the investigation phase of the digital Euro, however launching a digital euro is likely at least a five-year plan.


The US continues to lead in the innovation, regulation and implementation of blockchain-based digital securities, banking, payments, insurance, etc., but may not be as far along as others when it comes to CBDCs. Over the last decade, American innovators have built compelling innovations in blockchain, digital finance and cryptocurrency aimed at revolutionizing finance and creating new US tech superstars. And, as these technologies advance, they’re innovating industries beyond just finance, including retail, cybersecurity, supply chain management and so many more.

Tech leaders in the space like Securitize, BlockDaemon and others are paving the way for widespread adoption and access to liquidity by building the mechanisms for the industry to take hold. The benefits of CBDCs will propel the US implementation of a digital dollar. The release of CBDC is not just a technical change, but it’s also the revamp of a financial system that is centuries old. However, for now, Congress is still divided on whether there is even a need for a Digital Dollar. Since a Digital Dollar is an initiative that must be driven top down, by the Federal Reserve Bank among others, until there is a decision on the importance of a CBDC in the US, we will not see much progress here.

“The United States usually wins when we unleash the power of our innovative, dynamic private sector, with the government setting the rules rather than building the products,” said Brian Brooks, acting comptroller of the currency of the US Treasury Department’s Office of the Comptroller of the Currency. “But either way, given the intense focus of other countries in this area, let me say that because of the important role of the US dollar, we need the United States to step forward on this field.”

Implications of the digital finance arms race

Unlike what some may think, this is not about becoming the international currency of trade. This is driven by much deeper factors than the technology behind the currency.

What happens with CBDCs will have far-reaching implications on the future of digital finance, including cryptocurrency and digital securities. Much like the space race didn’t just put a man on the moon, but also catapulted the invention of important ancillary technologies, CBDC and DLT adoption will influence the forward-moving progress of every industry. There will be an exponential amount of innovations resulting from this digital finance arms race that we don’t even know about yet. The possibilities are endless and we’re just at the starting line.