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Alternative Market Briefing

The point of CBDC

Friday, July 16, 2021

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Sand dollar
B. G., Opalesque Geneva:

Major central banks across the world are racing to deliver a reliable version of digital money. China is testing a digital renminbi version; Europe plans to launch a digital Euro within five years; and in the U.S., the Fed is to release a discussion paper this summer regarding digital payments.

What is CBDC?

Digital money is a currency not held in physical form, and it can either be token (digital) or account-based.

Cryptocurrency, like Bitcoin, is digital money in token format, supported by blockchain technology, decentralised and unregulated.

CBDC (central bank digital currency), on the other hand, is digital money issued by a central bank. CBDCs are digital fiat. (Fiat money is government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it.) CBDC can either be implemented via the existing banking system as an intermediary or directly via mobile phones.

"Like other forms of cryptocurrency, CBDC is a form of virtual money that uses an electronic record or digital token to represent cash," explains PwC, a global financial consultant. "However it is issued and regulated by a country's monetary authority. The emergence of CBDC is a big milestone in the evolution of mo......................

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