The architecture of a CDBC is also of great importance the choice between a distributed ledger techonology (DLT) or a centrally controlled infrastructure may depend on each CB own policy (Auer R., Böhme R., 2020). Notwithstanding, Central Banks may enable the entry of third-parties which might secure households’ heterogenous preferences for ‘anonymity’, therefore, offering CBs partial anonymity in the transactions. We must bear in mind that a “retail’’ CBDC would merely embody a sort of ‘cash-like’ claim on the CB, whereby the CB would become the only issuer and, hence, the ultimate controller of such a fiat money. Figure I depicts this relationship between consumer needs (RHS) and the optimal design choice of CBDCs (LHS). Technological design considerations of a CBDC is related to households’ (consumers) needs and preferences when making a decision on which payment instrument to use. remaining of this article, I explain the main three types of a CBDC concerning its design. dollar, which is world’s par excellence fiat currency since the majority of CBs’ reserves are dominated in dollars, and to SWIFT, whereby unleashing the old continent from an era predominated by western-capitalist rules.Īlthough a digital Yuan is not the main purpose of this brief, it is important to highlight China’s incredible advances in the electronic payments industry, so as to understand the similarities that a possible near future issuance of a ‘’retail’’ CBDC may entail for Western Europe and the United States. Moreover, the West may also think about China seeking an alternative to the U.S. Alipay and WeChat Pay, China’s ‘Big Two’ privately owned financial services providers, are enlarging their electronic operations day-by-day. The reality is that China’s regulators and policymakers must deal with huge pressures from the private financial sector which is becoming slightly more important in terms of the volume of electronic payments share in the Asian country. However, is China trying to get ahead in the global financial order or is the sole purpose of a digital Yuan research-oriented, aiming at more ambitious long-term outcomes? Notably, the People’s of China’s Digital Currency Research Institute led various trials of a wide use of an eCNY and is proving to be reasonably successful. According to a fresh survey involving 63 Central Banks, a third of CBs have perceived CDBCs as a possible medium- to long-term project. The Bank for International Settlements (BIS) has been conducting interesting research on Central-Bank Issued digital currencies and worldwide Central Banks are beginning to welcome new initiatives regarding CBDCs. Digital Currencies: The New Financial Order? Source: Ledger Insightsĭeeming the far-reaching recent enthusiasm in the crypto-world, it is of no surprise that Central Banks would not like to be left behind in the race for new disruptive payment instruments which can shape the banking industry.
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