In the National Budget Speech last Thursday, Bangladesh’s Minister of Finance Mustafa Kamal announced that the Bangladesh Bank will be conducting a feasibility study for introducing Central Bank Digital Currency (CBDC) in the country.
While he didn’t explicitly state cryptocurrencies were a motivation, Kamal said other central banks are “working to launch digital versions of their currencies as an alternative to Crypto Currencies.” This is consistent with a recent Bank for International Settlements survey which found that 60% of central banks said crypto had spurred CBDC activity, with 90% of central banks now engaging in CBDC work.
Meanwhile, Chainalysis research has ranked Bangladesh in the top 30 countries for cryptocurrency adoption.
Kamal stated the primary motivation for a CBDC is to enable digital payments and encourage startups and ecommerce. “Coverage of the internet and e-commerce in the country has increased tremendously,” said the Finance Minister.
Cryptocurrencies can be used for speculative purposes or payments. However, stablecoins also allow assets to be transferred from a weak domestic currency to the U.S. dollar. This announcement coincides with the Bangladesh Bank recently devaluing the taka against the U.S. dollar for the third time in two months.
Elsewhere in South Asia, India is planning to issue a CBDC this year and has already enacted supporting legislation. With China at a very advanced pilot stage in its digital yuan issuance, together India and China will mean more than a third of the world’s population will have access to a CBDC soon.