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CBDCs: A new form of money | Kumaraguru Ramanujam, James Belding, Chris Ostrowski | #LDNBlockchain23
Discover the benefits and challenges of central bank digital currencies (CBDCs), a new form of money designed for financial inclusion, improved cross-border payments, and reduced risk.
- A central bank digital currency (CBDC) is a new form of money that uses central bank money, with a central bank’s liability.
- The need for CBDCs stems from the need for financial inclusion, reducing money laundering and terrorist financing, and improving cross-border payments.
- A CBDC can be designed to resemble a tokenized form of cash, allowing for offline transactions and reduced settlement risk.
- The design principles of a CBDC should prioritize sovereignty, accessibility, and policy robustness.
- A wholesale CBDC can already be implemented, with the Reserve Bank of India’s use case being a potential example.
- The US government is currently hesitant to adopt CBDCs, with some states even proposing anti-CBDC laws.
- A retail CBDC could potentially be used to improve financial inclusion, with a focus on online and offline transactions.
- The role of commercial banks in the transition to a CBDC is still unclear.
- The design of a CBDC should prioritize transparency, security, and interoperability.
- The pace of adoption is slow, with some countries already demonetizing cash and others experimenting with digital currencies.
- The public needs to be aware of CBDCs and their potential benefits and risks.
- A CBDC can be used for cross-border payments, with the potential to reduce costs and increase efficiency.
- The use cases for CBDCs are still being explored, with potential applications in financial inclusion, supply chain finance, and micro-insurance.
- The debate surrounding CBDCs is centered around concerns about privacy, sovereignty, and the potential for governments to control monetary freedom.