The rise of central bank digital currencies (CBDCs) is a global phenomenon. As of August 2022, two central banks have formally launched a CBDC: the Central Bank of the Bahamas (Sand Dollar), and the Central Bank of Nigeria (e-Naira), while two others are in advanced pilots.1 The interest in CBDCs, however, goes far beyond these countries. Out of the 109 countries tracked by the Atlantic Council (2022), 105 countries, representing more than 95 percent of global GDP, are exploring CBDCs in some form. This is a significant increase from the 35 countries that were considering CBDCs in May 2020. Similarly, the Bank for International Settlements (BIS 2022a) found that about 90 percent of the 81 central banks in their survey (representing 94 percent of global economic output), are exploring CBDCs with more than half developing or running concrete pilot projects.

Interest and work toward CBDCs by countries in the Asia-Pacific region has been gaining momentum for some time. The Asia-Pacific region covers countries in a wide spectrum of income groups and stages of financial development; thus, it is not surprising that there is great heterogeneity in their progress toward developing CBDCs. The interest in CBDCs has significantly grown in recent years, as captured by the number of times CBDCs are mentioned in speeches (Figure 1, left panel). The rapid increase in considering a CBDC in the Asia-Pacific region is not limited to the more advanced economies with developed financial markets. While China has been at the global forefront of experimenting with CBDCs, emerging markets, such as India and Thailand have made rapid progress, and several low-income countries (LICs) and Pacific Island Countries (PICs), such as Nepal and the Marshall Islands, are looking into research and development.

The surge in crypto assets in 2020–21 accelerated many central banks’ interest in CBDCs in an attempt to provide an alternative means of payment and counteract the volatile nature of unbacked private crypto assets and contain their risks to the financial system. Asian economies participated strongly in the crypto rally, but also in the eventual bust in 2022. As in other regions, 2021 was characterized by a strong growth of the crypto asset transactions and volumes. In August 2021, the total volume of crypto assets had grown by 230 percent year over year in Asian emerging market economies and by more than 300 percent year over year in advanced Asian economies (Figure 1, right panel).2 The crypto bust and ensuing “crypto winter” in 2022 have reduced volumes in Asia like in the rest of the world, but the interest of policymakers to safeguard the payment system and provide consumer protection has now accelerated, including the search for a consistent regulatory treatment of crypto assets and potential integration with CBDCs in some cases.