That the CCP wants access to data on people’s spending habits is not exactly a shock. Claire Jones, in Ant split says more about money than Ma, points out that their goals for a CBDC are different: The central bank that is arguably furthest along in developing a CBDC is the People's Bank of China (PBoC).
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Complex trade-offs will be addressed by central banks including how to balance scale, speed and open access with security and how to balance offline functionality with complexity and security. These features are: ease of use, low cost, convertibility, instant settlement, continuous availability and a high degree of security, resilience, flexibility and safety. It involves a hands-on operational and oversight role for central banks and public-private partnerships to develop the core features of the CBDC instrument and its underlying system. How can CBDC systems interoperate, and should offshore use be discouraged? CBDCs are a tool to pursue this through enhancing safety and neutrality in digital payments, financial inclusion and access, innovation and openness. Central banks exist to safeguard monetary and financial stability for the public good. Then CBDCs should meet public policy objectives. Digital functions that are not available with cash can be developed, such as programmability or viable micro-payments. In order to meet consumers' expectations, CBDCs need to be made to work most conveniently. We have to ask ourselves why consumers would want a CBDC and what would they want it to do? The recent European Central Bank (ECB) public consultation showed that they value privacy, security and broad usability. And the growing footprint of big techs in finance raises market power and privacy issues, and challenges current regulatory approaches.īelow the fold I discuss the idea of CBDCs With DeFi protocols, any concerns about the assets underlying stablecoins could see contagion spread through a system. Stablecoins may develop as closed ecosystems or "walled gardens", creating fragmentation. But make no mistake: global stablecoins, DeFi platforms and big tech firms will challenge banks' models regardless.
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They see banks as part of future CBDC systems. Central banks are mindful of these concerns and are working on answers.
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They all come with different regulatory questions, which need fast and consistent answers.īanks are worried about the implications of CBDCs for customer deposits. Decentralised finance (DeFi) platforms are challenging traditional financial intermediation. Stablecoins are knocking on the door, seeking regulatory approval. Central bank digital currency: the future starts today, a speech by Benoît Cœuré, Head of the Innovation Hub at the Bank for International Settlements identifies a number of problems that central banks face:īig techs are expanding their footprint in retail payments.