The Case for and against CBDC – five Years later
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Ulrich Bindseil
Abstract
The pros and cons of central bank digital currencies have been debated intensively since 2016. This paper reviews both the recent arguments in favour of CBDC emphasised by central banks preparing to issue CBDC, and the persistent concerns on CBDC, distinguishing a “dismissive” and a “fearful” perspective. Regarding the latter it is argued that the risks associated with CBDC can be mitigated by an adequate design. It is concluded that central banks should eventually react to the digitalisation of payments through CBDC issuance, even if not necessarily in the very near future, and that they should not give up the important role they had for so long in retail payments.
Abstract
The pros and cons of central bank digital currencies have been debated intensively since 2016. This paper reviews both the recent arguments in favour of CBDC emphasised by central banks preparing to issue CBDC, and the persistent concerns on CBDC, distinguishing a “dismissive” and a “fearful” perspective. Regarding the latter it is argued that the risks associated with CBDC can be mitigated by an adequate design. It is concluded that central banks should eventually react to the digitalisation of payments through CBDC issuance, even if not necessarily in the very near future, and that they should not give up the important role they had for so long in retail payments.
Chapters in this book
- Frontmatter I
- Foreword V
- Preface VII
- Contents XIII
- Introduction XVII
- The Authors XXI
- Digital Currencies and the Soul of Money XXXI
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I. Digitalization and Data: Can Incumbents Keep Up?
- Time for the Heavyweights – How established Financial Institutions can succeed in the Digital Assets Market 1
- Data-driven Innovation in Financial Services – Opportunities and Prerequisites 11
- Banks in the Digital Space 17
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II. Technology and Regulation: Are we Focused on the Right Things?
- Coordinating the regulatory approach to the new technology wave 25
- Who is afraid of the Blockchain? Towards a new EU Approach to Financial Regulation 31
- Adapting to the Digitalization of Banking and Finance 35
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III. Central Bank Digital Currencies: Cui Bono?
- The Case for and against CBDC – five Years later 45
- The Digital Euro: Policy Implications and Perspectives 63
- Central Bank Digital Currency: Is it really worth the Risk? 115
- The Case for Central Bank Digital Currencies 123
- On the Coming of Retail CBDCs: Public versus Private Money 139
- Wholesale CBDC as a possible Option for providing a Safe and Efficient Settlement Asset for Future Financial Infrastructures 173
- Theories and Practice of exploring China’s e-CNY 179
- Does Basel Dream of Electric Sheep? Prospects for the Development of Central Bank Digital Currencies 191
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IV. Decentralized Finance, Blockchain, Payment Systems, Tokens and Stablecoins, the Changing Rails of Banking and Commerce: In What do we Trust?
- A Douse of Digital Cold Water 199
- Crypto Assets, CBDCs and Trust 207
- Changing Landscape, Changing Supervision: Preserving Financial Stability in Times of Tech Revolution 213
Chapters in this book
- Frontmatter I
- Foreword V
- Preface VII
- Contents XIII
- Introduction XVII
- The Authors XXI
- Digital Currencies and the Soul of Money XXXI
-
I. Digitalization and Data: Can Incumbents Keep Up?
- Time for the Heavyweights – How established Financial Institutions can succeed in the Digital Assets Market 1
- Data-driven Innovation in Financial Services – Opportunities and Prerequisites 11
- Banks in the Digital Space 17
-
II. Technology and Regulation: Are we Focused on the Right Things?
- Coordinating the regulatory approach to the new technology wave 25
- Who is afraid of the Blockchain? Towards a new EU Approach to Financial Regulation 31
- Adapting to the Digitalization of Banking and Finance 35
-
III. Central Bank Digital Currencies: Cui Bono?
- The Case for and against CBDC – five Years later 45
- The Digital Euro: Policy Implications and Perspectives 63
- Central Bank Digital Currency: Is it really worth the Risk? 115
- The Case for Central Bank Digital Currencies 123
- On the Coming of Retail CBDCs: Public versus Private Money 139
- Wholesale CBDC as a possible Option for providing a Safe and Efficient Settlement Asset for Future Financial Infrastructures 173
- Theories and Practice of exploring China’s e-CNY 179
- Does Basel Dream of Electric Sheep? Prospects for the Development of Central Bank Digital Currencies 191
-
IV. Decentralized Finance, Blockchain, Payment Systems, Tokens and Stablecoins, the Changing Rails of Banking and Commerce: In What do we Trust?
- A Douse of Digital Cold Water 199
- Crypto Assets, CBDCs and Trust 207
- Changing Landscape, Changing Supervision: Preserving Financial Stability in Times of Tech Revolution 213
