Central Banks Digital Currency: Issuing and Integration Scenarios in the Monetary and Payment System
The paper reviews different approaches to implementation of the central bank digital currencies (CBDC). Retail as well as wholesale CBDC are reviewed. Implications for the domestic and cross-border usage are analyzed. Based on the theoretical assumptions
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and Victor Dostov1,2(B)
1 Saint-Petersburg State University, Universitetskaya Emb. 7-9, 199034 St Petersburg, Russia
[email protected] 2 Russian Electronic Money and Remittance Association, Orlikov Per. 5/2,
107078 Moscow, Russia
Abstract. The paper reviews different approaches to implementation of the central bank digital currencies (CBDC). Retail as well as wholesale CBDC are reviewed. Implications for the domestic and cross-border usage are analyzed. Based on the theoretical assumptions and practical cases available so far, different implementation models are classified and graded. The analysis shows that different CBDC implementation models for might require different level of central bank involvement and various impact on monetary policy. It also indicates that although significant adaptation of governance and technical procedures might be required, retail and wholesale CBDC may increase efficiency of the current payment systems, ensure higher transparency and availability of payments. However, for jurisdictions with limited payment infrastructure the costs of implementing CBDC might be prohibitive. Keywords: CBDC · Central bank digital currency · Payments · Correspondent banking · Monetary policy
1 Introduction In recent years, digital technologies are increasingly used in financial markets around the world. The emergence of virtual currencies, stablecoins, digital tokens that act as payment medium, equity or debt instruments based on the distributed ledger technology (distributed ledger technology - DLT) created a new class of assets: crypto-assets or digital financial assets (virtual assets). This made monetary regulators face two major problems. First, they need to develop an optimal regulatory approach to these new digital assets; secondly, there is an aspiration to use DLT by the central banks, to maintain control over the money supply and also improve the efficiency and integrity of the monetary and payment systems. Currently, there are many ways how central banks can use DLT: from optimizing settlements on the securities market to issuing bonds and managing their circulation; however, one of the key areas of DLT implementation is issuing digital currencies (central © Springer Nature Switzerland AG 2020 W. Abramowicz and G. Klein (Eds.): BIS 2020 Workshops, LNBIP 394, pp. 111–119, 2020. https://doi.org/10.1007/978-3-030-61146-0_9
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bank digital currencies - CBDC) and using them for national payment systems and cross-border payments. CBDCs are interesting not only because of the new ways to improve the effectiveness of existing monetary and payment systems, but because of the concerns of central banks and international financial institutions such as International Monetary Fund, Bank for international settlements and others regarding the stability of the national monetary systems and the future of central bank money. That is why it is crucial to assess relevance of issuing central bank digital currencies, understand their forms, and economic implications. The purpose o
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