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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