Why Do Central Banks Need CBDCs?

Ralph Wintergerst, CEO of the G+D Group, has recently written an article published in the International Banker magazine. The article’s title is ‘Britain needs a digital central bank currency’, but in fact the article is an explanation of why any central bank needs a Central Bank Digital Currency (CBDC). It is an excellent article and well worth a read. It does raise some questions as well as making some sound points.

In the rather wild west situation we have today with payments changing rapidly as technology allows new entrants and ways of working, the public going digital more quickly due to the pandemic, and cryptocurrencies and stablecoins offering the world new ways to think about value, CBDCs offer a route to restore order and reduce risk. However, the article suggests that CBDCs match what cash does. Why? If cash did not exist perhaps one can argue CBDCs must match cash to maintain continuity during change, but cash does exist and needs to until the real risks and opportunities of digital are understood.