Central Bank Digital Currency : Background Technical Note
In recent years, due to innovations in technology, the concept of digital currency has emerged out of the desire of some private entities to replicate specific properties of cash in the digital space. Digital currencies have been issued in various...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/undefined/603451638869243764/Central-Bank-Digital-Currency-Background-Technical-Note http://hdl.handle.net/10986/36766 |
| Summary: | In recent years, due to innovations
in technology, the concept of digital currency has emerged
out of the desire of some private entities to replicate
specific properties of cash in the digital space. Digital
currencies have been issued in various electronic formats
and value propositions, and in an uncountable number of
platforms, which allow for real-time, peer-to-peer and
not-in-person transactions. Digital currencies, especially
those that have an embedded decentralized payment mechanism
based on the use of distributed ledger technology (DLT), can
have a range of impacts on various aspects of financial
markets and the wider economy. Central banks, too, are
considering issuing their own digital currencies. A central
bank digital currency (CBDC) is a central bank liability
that is digitally created and recorded on centralized or
decentralized ledgers, denominated in an existing unit of
account, and convertible in physical cash, commercial bank
money and other forms of money on demand by the holder at
authorized entities. This report discusses the main
technical features of domestic retail CBDC and its potential
implications. The report is organized as follows. Section 2
will provide a general description of CBDC as they have
evolved in the literature. Section 3 will discuss the
economics of CBDCs, in particular it will explore the
implications of CBDC for monetary policy, financial
stability, financial intermediation, payments and
settlements, financial integrity, and financial inclusion in
general, and in the context of a developing economy as well
as the potential efficiency gains from the use of CBDCs.
Section 4 will evaluate the legal and regulatory aspects.
The last section will conclude, raising issues for further analysis. |
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