The phenomenon of central banks’ digital currencies (CBDC): key attributes and implementation perspectives
Paper dwells upon the phenomenon of the emergence of central banks’ digital currencies (CBDC). Forms of digital money as means of exchange have been identified, and differences between central banks’ digital currencies and other forms of central bank money such as physical money and reserves have be...
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| Format: | Article |
| Language: | English |
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NGO “Ukrainian Institute for Social Research after Olexander Yaremenko”
2020-04-01
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| Series: | Український соціум |
| Subjects: | |
| Online Access: | https://ukr-socium.org.ua/archive/no-1-72-2020/the-phenomenon-of-central-banks-digital-currencies-cbdc-key-attributes-and-implementation-perspectives/ |
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| author | Shkliar A. I. |
| author_facet | Shkliar A. I. |
| author_sort | Shkliar A. I. |
| collection | DOAJ |
| description | Paper dwells upon the phenomenon of the emergence of central banks’ digital currencies (CBDC). Forms of digital money as means of exchange have been identified, and differences between central banks’ digital currencies and other forms of central bank money such as physical money and reserves have been analyzed. Key causes of digital currency development by central banks were highlighted: the approach to the cashless economy, the fight against money laundering and tax evasion, the increasing competition of private digital currencies, the improvement of the monetary policy transmission mechanism, and technological advancement of the payment sector. Key differences between CBDC and private digital currencies and physical currencies were analyzed and highlighted in terms of availability, anonymity, P2P transfers, interest-bearing features, and other possible limits. The main advantages of the CBDC were noted: stability and reliability, safety, speed and ease of use. At the same time, a list of prerequisites and factors that could enhance the benefits of central banks implementing their digital currencies were highlighted: more efficient retail payments, diminishing cash payments, strengthening the effectiveness of monetary policy and improving financial stability. Existing options for the design of the CBDC have been clarified, taking into account the technological aspect and the scope: “retail” for the general public and “wholesale” for financial institutions. Key warnings of the central banks of the world about the possible negative consequences of launching the CBDC were noted, in particular, the disturbance of the financial system balance, when the flow of commercial bank clients to the central bank will force the first to raise deposit rates, which will eventually affect the cost of borrowing. The attitude of the key central banks of the world to the phenomenon of cryptocurrency development was noted, in particular, a much more positive attitude towards blockchain technology was observed compared to the position of the central banks on digital assets in general. At the same time, technological problems of blockchain technology in terms of its throughput capacity (number of transactions per unit of time) were noted, which is significantly inferior to other existing payment platforms. Central banks of the world have been grouped based on the CBDC development principles, and public justifications for the need for CBDC implementation. The key ones being to reduce cash use and increase financial inclusion. The four existing options for the introduction of the CBDC were analyzed, each of which has individual features. The combined efforts of the world’s central banks to study and test various aspects of the technical implementation of the CBDC in the form of joint projects were systematized. |
| first_indexed | 2024-04-10T16:59:45Z |
| format | Article |
| id | doaj.art-8a83843115b143a9ae28ddf612a7ec5f |
| institution | Directory Open Access Journal |
| issn | 1681-116X 2518-735X |
| language | English |
| last_indexed | 2024-04-10T16:59:45Z |
| publishDate | 2020-04-01 |
| publisher | NGO “Ukrainian Institute for Social Research after Olexander Yaremenko” |
| record_format | Article |
| series | Український соціум |
| spelling | doaj.art-8a83843115b143a9ae28ddf612a7ec5f2023-02-06T16:22:41ZengNGO “Ukrainian Institute for Social Research after Olexander Yaremenko”Український соціум1681-116X2518-735X2020-04-0117212313710.15407/socium2020.01.123The phenomenon of central banks’ digital currencies (CBDC): key attributes and implementation perspectivesShkliar A. I.0Institute for Economics and Forecasting, National Academy of Sciences of UkrainePaper dwells upon the phenomenon of the emergence of central banks’ digital currencies (CBDC). Forms of digital money as means of exchange have been identified, and differences between central banks’ digital currencies and other forms of central bank money such as physical money and reserves have been analyzed. Key causes of digital currency development by central banks were highlighted: the approach to the cashless economy, the fight against money laundering and tax evasion, the increasing competition of private digital currencies, the improvement of the monetary policy transmission mechanism, and technological advancement of the payment sector. Key differences between CBDC and private digital currencies and physical currencies were analyzed and highlighted in terms of availability, anonymity, P2P transfers, interest-bearing features, and other possible limits. The main advantages of the CBDC were noted: stability and reliability, safety, speed and ease of use. At the same time, a list of prerequisites and factors that could enhance the benefits of central banks implementing their digital currencies were highlighted: more efficient retail payments, diminishing cash payments, strengthening the effectiveness of monetary policy and improving financial stability. Existing options for the design of the CBDC have been clarified, taking into account the technological aspect and the scope: “retail” for the general public and “wholesale” for financial institutions. Key warnings of the central banks of the world about the possible negative consequences of launching the CBDC were noted, in particular, the disturbance of the financial system balance, when the flow of commercial bank clients to the central bank will force the first to raise deposit rates, which will eventually affect the cost of borrowing. The attitude of the key central banks of the world to the phenomenon of cryptocurrency development was noted, in particular, a much more positive attitude towards blockchain technology was observed compared to the position of the central banks on digital assets in general. At the same time, technological problems of blockchain technology in terms of its throughput capacity (number of transactions per unit of time) were noted, which is significantly inferior to other existing payment platforms. Central banks of the world have been grouped based on the CBDC development principles, and public justifications for the need for CBDC implementation. The key ones being to reduce cash use and increase financial inclusion. The four existing options for the introduction of the CBDC were analyzed, each of which has individual features. The combined efforts of the world’s central banks to study and test various aspects of the technical implementation of the CBDC in the form of joint projects were systematized.https://ukr-socium.org.ua/archive/no-1-72-2020/the-phenomenon-of-central-banks-digital-currencies-cbdc-key-attributes-and-implementation-perspectives/monetary policyfinancial inclusioncentral bank digital currency (cbdc)blockchaindistributed ledger technology |
| spellingShingle | Shkliar A. I. The phenomenon of central banks’ digital currencies (CBDC): key attributes and implementation perspectives Український соціум monetary policy financial inclusion central bank digital currency (cbdc) blockchain distributed ledger technology |
| title | The phenomenon of central banks’ digital currencies (CBDC): key attributes and implementation perspectives |
| title_full | The phenomenon of central banks’ digital currencies (CBDC): key attributes and implementation perspectives |
| title_fullStr | The phenomenon of central banks’ digital currencies (CBDC): key attributes and implementation perspectives |
| title_full_unstemmed | The phenomenon of central banks’ digital currencies (CBDC): key attributes and implementation perspectives |
| title_short | The phenomenon of central banks’ digital currencies (CBDC): key attributes and implementation perspectives |
| title_sort | phenomenon of central banks digital currencies cbdc key attributes and implementation perspectives |
| topic | monetary policy financial inclusion central bank digital currency (cbdc) blockchain distributed ledger technology |
| url | https://ukr-socium.org.ua/archive/no-1-72-2020/the-phenomenon-of-central-banks-digital-currencies-cbdc-key-attributes-and-implementation-perspectives/ |
| work_keys_str_mv | AT shkliarai thephenomenonofcentralbanksdigitalcurrenciescbdckeyattributesandimplementationperspectives AT shkliarai phenomenonofcentralbanksdigitalcurrenciescbdckeyattributesandimplementationperspectives |