Central banks speed up digital trials – OMFIF GPI 2019 special report
GPI 2019: Policy-makers are beginning to take retail central bank digital currencies more seriously, and their research and experiments are accelerating.
Each central bank may have differing motivations to issue a retail CBDC. Much will depend on their national and operational context, including their mandates and the characteristics of the economies in which they operate.
Sweden’s e-krona project seeks to provide a digital alternative in a society where cash makes up only 2% of GDP (the ratio is 10% in the euro area). In March 2019 the Central Bank of The Bahamas announced ‘Project Sand Dollar’, a pilot programme for a blockchain-based CBDC. The purpose of the project is to modernise and streamline the country’s financial system, reduce service delivery costs, increase transactional efficiency and improve the overall level of financial inclusion in its communities. The Eastern Caribbean Central Bank announced a similar project a few days after the Bahamas.
Many questions remain to be answered before we witness full implementation of CBDCs in any major economy.
Click here to find out why monetary policy implementation could become more effective with the help of CBDCs.