The debate continues, and many central banks and economic institutes are watching closely how the adoption of a CBDC has improved the lives of people who did not have access to banking services. The coin has two sides, and on the other hand, people are those who are adopting and learning about CBDCs, judging for themselves if the digital currency is a viable option or not. The issue remains for those who like to keep cash in their pockets.

For now, a few central banks have already issued a retail CBDC, i.e., they are accessible for public use. The most well-known examples are:

• The Bahamas (Sand Dollar): In 2020, it was the first country to issue a retail CBDC at a national scale. Its primary objective was to improve financial inclusion in the many islands of the archipelago, some of which lack physical banking branches.
• Jamaica (Jam-Dex): Launched in 2022, Jam-Dex is a digital Jamaican dollar currency. Its intention is to provide a secure, efficient, and safe payment medium that is a substitute for cash and other private digital payment systems.
• Nigeria (e-Naira): Launched in 2021, the e-Naira was the first CBDC for the African continent. Its intention is to increase financial inclusion, improve payment efficiency, and serve as a substitute for cryptocurrencies.

Are they “working”?

This is where the picture gets more detailed. While these CBDCs are technically operational, their usage and implementation have been slower than anticipated. This is what “working” means in this context:

• Financial Inclusion: The principal driver of such CBDCs was improved financial inclusion for the unbanked. While the infrastructure has been established, getting the people to use it, particularly where cash economies are well-established, is a real challenge.
• User Adoption: The e-Naira has not been embraced extensively in countries like Nigeria. Its poor adoption is a result of inadequate awareness within the general public, minimal use cases, and people preferring the existing modes of payment.
• Competition with Well-Established Systems: In countries where robust digital payment systems already exist (for example, mobile money in parts of Africa), a CBDC will need to offer something extremely compelling in order to attract users. In others, it has not been enough to change behavior.

On the other hand, there are also others like China (e-CNY) and India (e-rupee) running large-scale pilots with millions of consumers and significant volumes of transactions. These are not yet fully released, but their progress is generally taken to be a better measure of a CBDC’s likelihood of success, at least in part due to strong government support and integration into existing digital payment infrastructures.

So, while some countries have indeed launched CBDCs, the real-world experiment is how to make them widely adopted and prove their value to the average citizen. It is a delicate and crucial piece of the global CBDC conversation. Whether to require people to use them is at the heart of the debate about privacy and individual freedom.

In most of the countries where a retail CBDC has been introduced, take-up has been slow. This is because people have not been offered a compelling reason to switch from cash or their existing digital payment systems (including mobile money and credit cards).

Due to such minimal take-up, others have been detecting glimpses of certain governments or central banks considering actions that could be seen as a form of “soft coercion” or even “forced” usage.

The split:

Lack of Outright Mandatory Use (So Far)

• No country has, yet, made its CBDC the only legal tender, or explicitly forced its citizens to use it for all transactions. In every case, the CBDC is a complement to, not a replacement for, cash.
• Still, central banks are exploring what they can do to encourage take-up. This might be a stepping stone toward integrating the CBDC more into the payment system.

Examples of “Encouragement” that Could Be Seen as Coercion

• Nigeria’s Cash Shortage: Arguably the most visible example is Nigeria’s e-Naira. A government decision to reissue banknotes and limit the amount of physical money people could withdraw from banks created a persistent shortage of cash. The move was generally seen as an attempt to encourage people toward the use of the e-Naira. It led to countrywide rioting and protests, and while it did stimulate take-up of the CBDC, it also demonstrated the risks of taking this course of action.
• Subsidies and Incentives: Adoption can be promoted by providing financial incentives as well. For instance, Jamaica provided JAM-DEX to those who enrolled for a wallet. The Bahamas has also used this approach, handing out money as stimulus or discount program components via its Sand Dollar. While not exactly a mandate, it’s a way of using monetary incentives to bring about a new payment system.
• Banking Institution Requirements: The Central Bank of The Bahamas stated that it would compel all commercial banks to provide their customers with access to the Sand Dollar. What that means is that while one is not required to use it, their bank would be required to provide it. This is a backdoor way of incentivizing the currency by having it readily available and difficult to hide. Similarly, the European Central Bank is discussing a regulation requiring retailers and banks to accept and offer a future digital euro.

The Underlying Tension

The debate on “forced” use comes down to an underlying tension:

• Central Banks’ Goal: They want to build a safe, efficient, and inclusive digital payments system that will be on par with private cryptocurrencies and stablecoins. They also want to maintain control over monetary policy in a world where cash is no longer the primary currency.
• Citizens’ Concerns: The majority of citizens are concerned that a CBDC can be used to spy on individuals, to control what one can purchase, or to impose negative interest rates. A government that can see all transactions and can cut off access to one’s money gives them a power they have never had before.

Therefore, while no one is yet being put in the position of literally having no alternative but to use a CBDC, what is being done in some countries and suggested in others shows that central banks are ready to employ incentives, indirect compulsion, and disruptive policies in some cases in order to increase adoption. That is why the issue of “forced use” has been such a core topic of discussion and concern for civil libertarians.