Brazil's government-run payments system has become dominant

The payment system is the part that imho makes complete sense, in multiple ways: more competition in a market dominated by two US networks, strategic independence wrt to a critical infrastructure, providing a public good for underbanked demographics,... I don't get why places like the ECB, Bank of England, Bank of Canada, PBC,... (the US Fed is one of the few not pushing too actively in that direction) insist on bundling the two together instead of focusing on the payment system. If you succeed there, the potential for success is massive, without needing a central bank money feature, as shown by Pix and UPI. Getting one such feature right is hard enough, I don't get why they don't just focus on that and leave the central bank money baggage by the wayside.

[0] Central Bank Digital Currency, a form of money that has similar UX to bank accounts but represents a central bank liability, as opposed to commercial bank liabilities like your usual bank account. It doesn't need deposit insurance, it's legal tender and is at the same level as physical cash economically (M0).

[1] see eg https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op326~d5c223d9b...

Other than the EU and UK, which other major CB is considering CBDCs alone?

Numerically, most people I know in the space are heavily motivated by the Digital Public Infrastructure (DPI) model both India and Brazil have been using, and DPI has been a hot topic in the DevEcon space for 4 years now.

In fact, Indian and Chinese lobbyists now compete with each other across Africa for DPI related infra work (Biden admin even helped support India's evangelism of the Indian DPI model in ASEAN and Africa), and Brazil's Pix has seen significant uptake in Argentina and Uruguay.

And most regional economies like Vietnam, Pakistan, Nigeria, and South Korea have similar implantations

The big difference might be public versus private domain experience. In newer economies like BRICS and much of ASEAN, the infra and norm setting work fell onto regulators. But in more developed economies like the US, UK, or EU, similar developments could be done by the private sector.

The ones I mentioned, eg, Canada [0], China [1]. But it's really most of them [2], the US is rather the exception.

[0] https://www.bankofcanada.ca/digitaldollar/

[1] https://en.wikipedia.org/wiki/Digital_renminbi

[2] https://cbdctracker.org/

And most of the countries on that list are either implementing their own payment infra or leveraging India, Brazil, Russia, or China's.

It doesn't hurt to have a CBDC - it gives you a seat at the table when norms and global regulations are made.

> I'm just questioning the bundling with central bank money

In most countries excluding the US, EU, UK, and Canada, the Central Bank also sets financial regulations and provides the infra backbone for fintech, and in some cases still own commercial banks.

By having central banks attached to these projects, it helps build a testbed so private sector players can then extend on.

Most countries aren't like the US where private sector investors are open to investing in innovations, so it would fall to the Central Bank to begin testing and implementing these products.

Again, you can get all of that without needing a CBDC, just have the central bank build and run a regular payment system. It gets substantially more complex once you make it a CBDC, making the chance of success even smaller. For what gain? You actually introduce some tangible risks for the financial system, the fact that it's regulated doesn't eliminate that. See eg [0]: "Threats to financial intermediation in steady state arise mainly in situations where the central bank balance sheet expands, and triggers adjustment mechanisms that lead to more costly or less stable funding of the banking system, while in crisis times run risk may increase." The typical way to address those risks are holding limits, which add operational complexity (you need an overflow logic, you need a draft logic if you want to enable payments greater than the holding limit), and put some limits on programmability [1].

[0] https://www.imf.org/en/Publications/WP/Issues/2024/10/11/Cen...

[1] https://ieeexplore.ieee.org/document/10628652

> Again, you can get all of that without needing a CBDC

Yep. Pretty much.

> For what gain?

Because if X country is doing it, Y country should do it as well, and then export the associated infra to a less developed country. By the 2020s, it became a completion between Chinese vs Indian consultancies (ay least in Africa)

You have to remember the Cryptocurrency bubble was going strong until 2023 when the FTX scandal happened.

Hiring a team of 20-30 engineers isn't that expensive for a moonshot that makes it easier to negotiate if that moonshot somehow actually has an impact on global finance.

Of course, most moonshots fail, but it still doesn't hurt to have something back of pocket or build some infra if needed.