Central bank digital currency – nine key questions answered
When Facebook proposed its own currency, central banks started looking into CBDC with more urgency, writes Martin C.W. Walker
Central bank digital currency is turning into a pre-occupation of central banks and much of the fintech world. Hundreds of pages of analysis have been produced in the last eighteen months. However, the concept dates back almost three decades and has so far had little impact on the world. So, what are the essential questions about CBDC that need to be answered?
- What is it?
Money exists in many forms. Two of the most important, banknotes and central bank reserves are created (with a few exceptions in the case of banknotes such as Scotland and Hong Kong) by central banks. Though banknotes are physical and central bank reserves (the balances commercial banks deposit at central banks) are digital, they are economically equivalent. Central Bank Digital Currency (CBDC) is intended as another form of central bank money, digital like reserves but available to as wide a range of users as physical cash, for both retail and wholesale users. However, potential wholesale users typically have reserve accounts and access to market infrastructure that allows settlement using reserves. This makes the difference between reserves and wholesale CBDC more subtle than that between notes and retail CBDC.
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Πηγή: blogs.lse.ac.uk
