CBDC Risks Becoming a Gigantic Flop

If Central Bank Digital Currencies (CBDCs) do not solve a real problem, then they will fail. In a recent paper by Peter Bofinger and Thomas Haas, Professor for Monetary Policy and International Economics and Research Associate and Chair for Monetary Policy and International Economics respectively at the University of Wurzbürg, they throw doubt on whether central banks have found a compelling need for CBDCs.

The paper touches on opportunities to create a solution for payment service providers, such as Diem, to hold collateral, to address inefficiencies created by payment duopolies or to help the unbanked with digital payments. The paper does not suggest whether these represent a sufficiently compelling need.

Evaluation questions

This article looks at the work being done on CBDCs through the prism of two lenses: