The Challenge of Achieving CBDC Objectives

Finextra has published an article highlighting different visions for Central Bank Digital Currencies (CBDCs).

Jon Cunliffe, Deputy Governor at the Bank of England, made a speech that said it was ‘probable’ that the ‘state will need to issue, public money’. It contrasted this with statements by the President of the Boston Federal Reserve, Eric Rosengren, who was more cautious, wanting to see ‘whether other technologies could more cheaply or efficiently address those problems’, the problems being reasons for issuing a CBDC.

Both these comments tie in with a paper written by Antonio Fatás at the Centre for Economic Policy Research (CEPR) – ‘The Conflict Between CBDC Goals and Design Choices’. While physical cash runs in parallel with private digital money, in many parts of the world physical cash is diminishing. In those areas a CBDC can be seen, as the ECB puts it, as the ‘natural transition from currency’, giving ‘people more choices about how to pay’.