The Need For A Very Good Reason for a CBDC

The Federalist Society in the US has published a useful, and brief, summary of where key economies are in their CBDC thinking ¹.

It notes that leading central banks have not agreed to or encouraged the tokenisation of assets because of questions of governance and ownership, regulatory, legal and monetary issues, and transparency and enforcement, particularly Anti-Money Laundering and Countering the Financing of Terrorism (AML/CTF) considerations. This includes the challenge of how to provide access to a country’s CBDC by non-resident financial institutions.

The Bank of England is now on part two of a study developing an Application Programming Interface (API) platform to distribute a retail CBDC. Payments Canada is working with the Bank of Canada on the implications of a CBDC. The Riksbank announced on 31 March 2023 that its enquiry did not find ‘sufficiently strong societal needs’ for an e-krona. It will now look to see if there are sufficient other needs to introduce one.