My latest paper digs into the CBDC experience in the Caribbean.
Perhaps shocking no one, much of the CBDC use is built on government activity.
https://www.cato.org/briefing-paper/cbdc-lessons-caribbean
Compared to cash, the amount of CBDC in circulation is almost nonexistent.
However, it's much more interesting to zoom in on the CBDC alone. Here we see something interesting. Look how abrupt these changes are.
It took some digging, but I was able to uncover that almost every one of these abrupt jumps was caused by the Bank of Jamaica giving away money at special events.
I was also able to uncover a similar pattern in The Bahamas.
In short, governments may build CBDCs, but that does not mean people will use them.
Reflecting on the lack of consumer adoption in 2024, Central Bank of The Bahamas Governor John Rolle said commercial banks would soon be forced to distribute the CBDC—suggesting a shift from incentives to mandates.
So whether by carrot or by stick, governments want their citizens to adopt CBDCs.
Yet the real question they should be asking is “What do our citizens want?” Based on the experience thus far, it’s not a CBDC.
He says the "financial industry just has too much power, and would never allow a public system to compete with its products."
Again, has he really not heard of FedNow? Or for that matter, the Fed's check and ACH services?
Frankly, it's also strange that Krugman criticizes concerns about CBDCs but makes no mention of the fact that Pix was forced on people. The government forced banks to adopt it.
For anyone interested in what's happening with Brazil's actual CBDC work. The HRF CBDC Tracker has you covered.
