Last week, I introduced the concept of retail Central Bank Digital Currencies (CBDC) and why central banks may want to issue them. In this part, I am going to look at the practical difficulties that CBDC must overcome. I will do this by looking at the three basic functions of cash, namely to act as a medium of exchange, a store of value, and a unit of accounting. Hopefully, by doing this, you will understand why it is so much harder to launch a CBDC than any run-of-the-mill cryptocurrency or electronic payment system and get an appreciation for what a genius invention physical cash really is.
CBDC Part 2: The tradeoffs
CBDC Part 2: The tradeoffs
CBDC Part 2: The tradeoffs
Last week, I introduced the concept of retail Central Bank Digital Currencies (CBDC) and why central banks may want to issue them. In this part, I am going to look at the practical difficulties that CBDC must overcome. I will do this by looking at the three basic functions of cash, namely to act as a medium of exchange, a store of value, and a unit of accounting. Hopefully, by doing this, you will understand why it is so much harder to launch a CBDC than any run-of-the-mill cryptocurrency or electronic payment system and get an appreciation for what a genius invention physical cash really is.