DNB Quick Guide to CBDCs

In April 2020 Harro Boven and Peter Wieters published a Dutch National Bank (DNB) Occasional Study on the objectives, pre-conditions and design choices for Central Bank Digital Currencies (CBDCs). Harro wrote an abridged version that was used in Payers’ December publication about CBDCs which is summarised here.

A general purpose CBDC is a digital currency, issued by the central bank that is universally accessible.

A CBDC joins cash and reserve accounts at the central bank as a form of central bank money. The paper suggests three potential rationales for CBDCs: To play a role in retaining public money for general use.

• As a back-up against the failure of critical infrastructure in the payment system (although this requires the CBDC to be set up on infrastructure that is separate from the normal payment infrastructure. This has significant cost implications.).

• To cater for the preferences of the public related to privacy and the use of data for public objectives (eg. anti-money laundering).