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    Money and Central Bank Digital Currency

    Shirai, Sayuri | February 2019
    Abstract
    This paper takes an overview of the concepts and features of central bank money and private sector money and focuses on the actual performance of these types of money in selected advanced and emerging economies. In addition, digital coins (crypto assets), such as bitcoin, are newly emerged private sector money. Much attention has been given to digital coins because the underlying distributed ledge technology (DLT) enables a decentralized verification process while maintaining features similar to cash. Some central banks have expressed unease about these digital coins because of the high volatility in their values. However, the size of the newly emerged private sector money currently remains limited due to its limited use as a payment tool. Thus, it is likely to take time before digital coins are a threat to commercial banks and central banks. Meanwhile, some central banks have examined the potential application of DLT and the issuing of their own digital coins to the general public or financial institutions—the so-called “central bank digital currency” initiatives. So far, no central banks have found strong advantages of the initiatives because of several technical constraints. Given that technology has been progressing quickly, however, it is possible that central banks may increase their interest in the central bank digital currency proposals based on DLT and consider actual implementation in the near future. Meanwhile, Sweden’s Riksbank has initiated a separate move by considering the issuance of deposit accounts and prepaid payment methods to the general public in the face of declining cash use. Other central banks have shown little interest in the Swedish initiative because of the potential adverse impacts on the banking system caused by a shift in retail deposits from commercial banks to the central bank.
    Citation
    Shirai, Sayuri. 2019. Money and Central Bank Digital Currency. © Asian Development Bank Institute. http://hdl.handle.net/11540/9626.
    Keywords
    Financial & Private Sector Development
    Private Sector Investments
    Private Sector Participation
    Private Sector Projects
    Financial Stability
    Financial Management System
    Financial Restructuring
    Capital Market Development
    Market Development
    Private enterprises
    Private ownership
    Government
    Infrastructure projects
    Development projects
    Financial loss
    International Financial Market
    Multilateral Financial Institutions
    Economic Recession
    Market
    Crisis
    Economic indicators
    Growth models
    Central local government relations
    Administration
    Decentralization in government
    Subnational governments
    Government monopolies
    Intergovernmental fiscal relations
    Investment of public funds
    Local finance
    Government services
    State governments
    Municipal government
    Bank failures
    Business recessions
    Multilateral development banks
    Regulatory reform
    Capital
    Exports
    Economic development projects
    Investment Requirements
    Banks
    International banks and banking
    Capital movements
    Central banks and banking
    Bills of exchange
    Swaps
    Banks and banking
    Financial crisis
    Credit control
    Credit allocation
    Capital market
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    Citable URI
    http://hdl.handle.net/11540/9626
    Metadata
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    adbi-wp922.pdf (782.1Kb)
    Author
    Shirai, Sayuri
    Theme
    Private Sector
    Finance
     
    Copyright 2016-2020 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2020 Asian Development Bank Institute, except as explicitly marked otherwise