BIS: Central bank digital currencies: putting a big idea into practice

31 March 2021

Central bank digital currencies (CBDCs) are an opportunity for central banks to offer a technologically advanced representation of central bank money for the digital economy.

Their introduction will have profound effects for users, central banks, financial institutions and the international monetary system. A retail CBDC could address long-standing and emerging issues in payments. It could increase competition, lower fees and encourage innovation. CBDCs would be part of an ecosystem with a range of private sector payment providers, and be designed to enhance efficiency without impairing central banks' monetary policy and financial stability mandates and within today's two-tier financial system. Multi-CBDC arrangements could tackle frictions in today's correspondent banking systems, such as differences in the opening hours of payment systems, varying communication standards and a lack of transparency around exchange rates or fees. Central banks around the world are collaborating to put this big idea into practice.

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