An astonishing 80% of central banks are engaging in work around central bank digital currencies, from research to experimentation and pilot programs.
A recent Bank for International Settlements, or BIS, chart demonstrates the growing interest in CBDCs by central banks, as reflected in speeches and reports as well as people's Google search interests over time.
The Federal Reserve Bank of Boston is collaborating with the Massachusetts Institute of Technology to design and build a "Hypothetical digital currency oriented to central bank uses."
In countries where accessing a bank account is difficult, having a smartphone with access to digital assets will remove friction and provide a means for a more inclusive financial system.
The plan laid out by China's central bank follows what the BIS and the Federal Reserve would describe as an indirect, or hybrid, model of a CBDC. With this model, much will appear the same for the consumer, but money could be fundamentally different.
With the new type of CBDC, the dynamic currency would be controlled by the central bank.
Smart deposits can be defined as monetary deposits that can communicate with the central bank - in this case, through an intermediary institution.
Importantly for many economists, smart deposits would allow the central bank to break through the zero lower bound and institute negative interest rates.
In effect, the central bank would be able to penalize depositors for holding on to money instead of spending it to stimulate the economy in a recession.
As Yifei stated with respect to China's CBDC:." would allow the central bank to keep track of necessary data to implement prudent regulation and crack down on money laundering and other criminal offences.
Central bank digital currencies have the power to upend global finance
Published on Oct 26, 2020
by Cointele | Published on Coinage
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