Jean-Michel, we’ve observed a growing interest within payment systems circles regarding Central Bank-issued Digital Currencies (CBDC). Issuing digital currency would be less costly than issuing physical currency. So why do many central banks show little enthusiasm for the idea?
Of course, issuing CBDC rather than banknotes and coins would be cheaper, in particular because the running costs of a CBDC scheme are negligible. For example, there are no banknotes to print, no secured paper or sophisticated inks to procure, and no dangerous transportation involved. But many central bankers consider that citizens already have digital alternatives to notes and coins: bank deposits. In developed economies, these are easily accessible through extensive networks of bank branches and are safe due to generous deposit insurance coverage. As a result, many central bankers believe that there is in practice no real demand for CBDC, and therefore consider that there is no business case for them to issue it.
Ok, but then why not launch a series of communication campaigns to explain the benefits of CBDC? Citizens could then move progressively from physical to digital, as has been the case in many instances in society.
Well, CBDC raises a number of difficult issues for which there are currently no convincing answers. One is a financial inclusion issue: anyone can hold banknotes, but digital cash cannot ... Read more in the CBPN Members' Library with your annual subscription
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