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CBDCs have little use for the US, but jurisdictions like the EU have good reasons to keep building wholesale CBDCs following Trump’s CBDC ban.
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The ban on central bank digital currencies (CBDCs) in the United States could significantly influence global CBDC projects, according to industry observers.
On Jan. 23, US President Donald Trump signed an executive order officially prohibiting the establishment, issuance, circulation and use of CBDCs in the US.
Celebrated by many in the crypto community, industry executives say the decision could have ripple effects for countries exploring CBDC development, including retail and wholesale initiatives.
Retail versus wholesale CBDCs
CBDCs are digital currencies issued by a central bank designed to improve the efficiency and inclusiveness of payment systems.
While a retail CBDC targets usage by the general public, wholesale CBDCs are exclusively designed for interbank payments and securities transactions.
Trump’s move to ban CBDCs in the US will impact “any retail CBDC project in the next four years,” according to CBDC observer Yifan He, who founded the Chinese blockchain firm Red Date Technology.
“But the point is that I don’t think any country can even develop a real retail CBDC in the next ten years,” He told Cointelegraph, referring to numerous technical barriers and lack of solutions.
Wholesale CBDCs as an option to a US-controlled financial system
While the US CBDC ban could trigger a further slowdown in retail CBDCs, wholesale CBDCs would likely expand further, according to researcher Lambis Dionysopoulos, who works at the EU Blockchain Observatory and Forum.
“Wholesale CBDCs are being considered more seriously than ever before,” he said, adding that such CBDCs have the potential to offer an alternative to a US-controlled financial system.
Countries like Russia have voiced concerns about their reliance on U.S.-dominated systems, Dionysopoulos noted:
“Such reliance means they can be cut off, quite literally, at the press of a button. Even Christine Lagarde, president of the ECB, has emphasized that a CBDC would be a matter of autonomy and security for Europe.”
Given these developments and Trump’s appetite for “trade and tax wars,” there is a chance that global wholesale and cross-border CBDC initiatives expand, “particularly in countries that the US views unfavorably,” Dionysopoulos said.
On the other hand, he added that retail or wholesale CBDCs have little use in the US.
CBDC builders will likely try to oppose Trump’s CBDC criticism
While some industry observers say CBDCs were a “flawed idea from the onset,” others are confident that global CBDC development will continue unabated.
Tomer Warschauer Nuni of Kima Network said countries like China, Israel, Australia, and the European Union remain committed to CBDCs to enhance their payment systems and assert monetary sovereignty.
Related: Trump’s potential Treasury secretary pick ‘sees no reason’ for US CBDC
“In fact, the EU’s commitment to the digital euro may intensify as it seeks to establish strategic autonomy in payments and reduce reliance on non-European infrastructure,” he said, adding:
“We see this as an opportunity to build the bridges necessary for this unique interoperability of centralized and decentralized financial ecosystems to ensure global financial systems can thrive, regardless of regional policies.”
The Bank for International Settlements and Ripple — a major CBDC technology contributor globally — declined to comment to Cointelegraph on the implications of Trump’s CBDC ban.
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This article first appeared at Cointelegraph.com News
