CBDCs: An Insurance Policy or a Necessity?

The Central Bank Digital Currency (CBDC) conference took place at the very end of August in Frankfurt, the first CBDC conference in person reflecting just how new CBDCs are.

A big question recurring throughout the conference was what is the benefit of issuing a CBDC? There appear to be two communities. Those who either lack elements of a modern payment infrastructure and/or for whom financial inclusion is a problem, and countries for whom concerns about the sovereignty of their money supply is an issue.

For this second group the user case is more ambiguous. There seemed to be a sense that money itself is changing and there is the potential for central banks to lose control of the nation’s money, with all the implications for monetary policy that would bring.