Introduction
In recent years, there has been a surge of interest among central banks globally in researching and creating central bank digital currencies (CBDCs). More than 100 countries are at various stages of conceptualization, design, and implementation. In addition to the six-country Eastern Caribbean Currency Union, three countries have formally established CBDCs for their currencies to date. An additional 21 countries, including China, are undertaking pilot projects with a goal of moving forward to full implementation in the next few years.
What are central banks chasing? What are the goals in creating a CBDC? What are the key design considerations to ensure that a CBDC is trusted and well suited to achieving those goals in a way that is consistent with the efficient execution of monetary policy and financial stability?
These are some of the questions that we will explore in this brief. In our discussion, we will argue that CBDCs need to be viewed as a means to an end. Can they facilitate the development of a more efficient and inclusive financial system? Can they enable a real-time payments regime and less expensive cross-border payments? The answers to those questions depend, in part, on the starting point (i.e., where we are today) and the important design choices made in the development and execution of CBDCs.
