The CBDC landscape:
The evolution of digital money is taking hold, as policymakers and central bankers explore the idea of government-backed assets on blockchain called Central Bank Digital Currency, or CBDCs. More than 90 countries are either researching or developing CBDCs. Many see the direct advantages for their citizens and economies: decreased dependence on cash, less friction in international payment channels to better financial access, and programmability options. CBDC design presents a myriad of decisions and challenges that policymakers need to weigh as they chart their course for the digitization of money — decisions that will shape the future global financial system.
The policymaker’s guide:
Stellar Development Foundation (SDF), a non-profit organization that supports use of the Stellar network, has developed a comprehensive guide for policymakers to consider technology options for CBDCs. Authored by a cross-functional team at SDF with input from external resources such as the World Bank and Alliance for Financial Inclusion, the guide is titled “Understanding CBDCs: a guidebook for regulators and policymakers.”
In this guide, you will learn:
- How CBDCs can help improve financial inclusion and be beneficial to all participants
- Cooperation between public and private entities gives best results in developing solutions
- Open blockchains - maintaining robustness and security while providing equal access
- CBDCs potential for interoperability and ease of exchange for cross-currency transactions
- Comparison of key characteristics to prioritize: interoperability, security, sustainability, reliability, and programmability
Central bankers and policymakers are at a crossroads with CBDCs with many important dimensions to consider. SDF recognizes that CBDCs being developed today can have far reaching benefits both in emerging economies and developed markets, especially for the unbanked and underbanked. The authors hope this guide provides insight to global decision makers and helps them achieve the potential positive impact of CBDCs on open networks.
The vision at SDF is to support the realization of an “internet of money” that makes sending payments as easy as sending an email, on systems that are available to everyone.