Central Bank Digital Currencies (CBDC) could change all financial relationships, argues the latest Deutsche Bank Wealth Management CIO report.
CBDC can operate in several forms, but in most cases involve making transactions (between individuals, or government to individuals) directly through central bank accounts. The benefits from CBDC could include:
Increased transaction speed, security and transparency – with associated benefits in combating payments fraud and ensuring good corporate governance.
More effective monetary policy – for example through faster implementation of changes in monetary policy, or by removing the option to hold cash on investors’ balance sheets, which CBDC would in some forms permit, and which would enable central banks to lower interest rates even deeper into negative territory.
CBDC are currently being investigated by several central banks, with China and Sweden having undertaken trials. Major uncertainties remain about how full-scale CBDC would operate and about their implications for capital markets. Further, there are important concerns about potential threats to individuals’ privacy. But, as the report points out, CBDC may soon become part of our lives, so societies need to learn how to use them best.
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Central Bank Digital Currencies (CBDC) could change all financial relationships, argues the latest Deutsche Bank Wealth Management CIO report.
CBDC can operate in several forms, but in most cases involve making transactions (between individuals, or government to individuals) directly through central bank accounts. The benefits from CBDC could include:
CBDC are currently being investigated by several central banks, with China and Sweden having undertaken trials. Major uncertainties remain about how full-scale CBDC would operate and about their implications for capital markets. Further, there are important concerns about potential threats to individuals’ privacy. But, as the report points out, CBDC may soon become part of our lives, so societies need to learn how to use them best.
Read the CIO report.
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