![]() Auer and Böhme (2020) provide an overview of underlying trade-offs and the related hierarchy of technical design choices, while others explore options and describe potential limits that the underlying technology may impose on the mix of policy objectives (e.g., Shah and others, 2020). This paper also builds on the recent literature that discusses detailed CBDC design considerations and technological solutions. There are general evaluations of CBDC models and their main attributes ( Norges Bank, 2018) and considerations on how to design CBDC to ensure financial stability by pre-empting liquidity squeezes and system-wide run from bank deposits ( Kumhof and Noone, 2018). There are many papers that provide high-level overviews of CBDC implications for payments, monetary policy, and financial stability ( BIS, 2018) or their effects on monetary policy instruments ( European Money and Finance Forum, 2018 and Lariccia, 2018). Also, while CBDC could increase deposit-taking institutions’ funding costs, impact the funding structure of deposit-taking institutions, and intensify “run” risk, design choices such as tiered CBDC remuneration and various policy measures can help ease such concerns.īuilding on those conclusions, this paper takes a closer look at the design, risk, and operational considerations of issuing retail CBDC, based on published research, central bank experiments, and ongoing discussions among stakeholders. A well-designed CBDC could enhance financial integrity compared to cash, but a poorly designed one could undermine the authorities’ compliance with financial integrity standards. Some concerns have been expressed that CBDC issuance could hamper monetary policy transmission, but the paper concluded that this is unlikely, and it may even strengthen it through greater financial inclusion. Overall, the note found no universal case for CBDC adoption yet, and that demand for CBDC will depend on the attractiveness of alternative forms of money. This assessment concluded that the impact of CBDC introduction will hinge on its design and country-specific characteristics. IMF staff have proposed a conceptual framework to assess the case for retail CBDC issuance from the perspectives of users and central banks (Mancini Griffoli and others, 2018). Such CBDC would be a central bank liability and form part of the base money supply. To address these challenges, some central banks are exploring issuing retail CBDC-a widely accessible digital form of fiat money (available to the public) that could be legal tender. In other countries, the private sector lags in improving financial inclusion and reducing the operational costs and risks associated with the management of physical currency. ![]() In some economies, cash is disappearing as a means of payment, and new digital payment systems are challenging central bank roles. As technology, user needs, and regulation change, the payment system may have to adapt. CoinMarketCap is not responsible for the success or authenticity of any project, we aim to act as a neutral informational resource for end-users.In addition to monetary and financial stability roles, central banks play a core public sector role in the economy to provide a safe, efficient, and inclusive payment system. The views and opinions expressed in this article are the author’s own and do not necessarily reflect those of CoinMarketCap. ![]() This article is not intended as, and shall not be construed as, financial advice. It is important to do your own research and analysis before making any material decisions related to any of the products or services described. This article is intended to be used and must be used for informational purposes only. ![]() CoinMarketCap is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by CoinMarketCap of the site or any association with its operators. The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. This article contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). ![]()
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