Central bank digital currencies: policy and design
- Central bank digital currencies (CBDC) are designed to allow direct access to a central bank’s deposits also to households
- Currently, a vast majority of central banks are engaging in CBDC research
- CBDC is neither a cryptocurrency nor a totally new technology, but rather a natural evolution of money in order to cope with rapid technological progress
- Design features must be carefully assessed, as to not to interfere with existing monetary goals
- However, CBDC’s costs and benefits are not limited to the monetary sphere, as they extend into the social and environmental realm
- Monetary policy and financial stability are key points on the CBDC research agenda
- Several solutions to financial stability risks have been proposed, particularly solutions based on the concept or quantity rationing or interest rate tiering of CBDC
- Broader macroeconomic and strategic geopolitical effects (e.g. ‘first-mover advantage’) of CBDC must be accounted for
- The future co-evolution of traditional and digital currencies is still an open question
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