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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Main Author: World Bank
Format: Report
Language:English
Published: World Bank, Washington, DC 2021
Subjects:
Online Access:http://documents.worldbank.org/curated/undefined/603451638869243764/Central-Bank-Digital-Currency-Background-Technical-Note
http://hdl.handle.net/10986/36766
id okr-10986-36766
recordtype oai_dc
spelling okr-10986-367662021-12-22T05:10:47Z Central Bank Digital Currency : Background Technical Note World Bank CENTRAL BANK COORDINATION DIGITAL CURRENCY PAYMENT INFRASTRUCTURE PAYMENT AND SETTLEMENT SYSTEM INTERNATIONAL FINANCIAL ARCHITECTURE MONETARY POLICY MONEY CREATION FINANCIAL STABILITY DISTRIBUTED LEDGER TECHNOLOGY ANTI-MONEY LAUNDERING COMBATING THE FINANCING OF TERRORISM 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. 2021-12-21T22:11:32Z 2021-12-21T22:11:32Z 2021-11 Report http://documents.worldbank.org/curated/undefined/603451638869243764/Central-Bank-Digital-Currency-Background-Technical-Note http://hdl.handle.net/10986/36766 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Economic & Sector Work Economic & Sector Work :: Other Financial Sector Study
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic CENTRAL BANK COORDINATION
DIGITAL CURRENCY
PAYMENT INFRASTRUCTURE
PAYMENT AND SETTLEMENT SYSTEM
INTERNATIONAL FINANCIAL ARCHITECTURE
MONETARY POLICY
MONEY CREATION
FINANCIAL STABILITY
DISTRIBUTED LEDGER TECHNOLOGY
ANTI-MONEY LAUNDERING
COMBATING THE FINANCING OF TERRORISM
spellingShingle CENTRAL BANK COORDINATION
DIGITAL CURRENCY
PAYMENT INFRASTRUCTURE
PAYMENT AND SETTLEMENT SYSTEM
INTERNATIONAL FINANCIAL ARCHITECTURE
MONETARY POLICY
MONEY CREATION
FINANCIAL STABILITY
DISTRIBUTED LEDGER TECHNOLOGY
ANTI-MONEY LAUNDERING
COMBATING THE FINANCING OF TERRORISM
World Bank
Central Bank Digital Currency : Background Technical Note
description 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.
format Report
author World Bank
author_facet World Bank
author_sort World Bank
title Central Bank Digital Currency : Background Technical Note
title_short Central Bank Digital Currency : Background Technical Note
title_full Central Bank Digital Currency : Background Technical Note
title_fullStr Central Bank Digital Currency : Background Technical Note
title_full_unstemmed Central Bank Digital Currency : Background Technical Note
title_sort central bank digital currency : background technical note
publisher World Bank, Washington, DC
publishDate 2021
url http://documents.worldbank.org/curated/undefined/603451638869243764/Central-Bank-Digital-Currency-Background-Technical-Note
http://hdl.handle.net/10986/36766
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