A central bank digital currency would have
several advantages for consumers.
First, it would
fully eliminate counterparty risk from commercial
Second, the safety of a digitally-distributed
ledger would make transactions more secure.
Third, a central bank digital currency could also
deepen access to the central bank balance sheet
on top of what is currently offered today from
If consumers had accounts
directly at the central bank, it would give central
banks another powerful tool to implement
monetary policy by incentivising people to save
However , the digital currency does
have a downside. It would require
central banks to build a ‘logistical’
interface , and manage it. This in itself
is a cost over and above the distributed ledger.
The central bank would have to ‘create
packages’ for its new eager consumers.
This would put it into direct competition
with banks. Think of it as a logistics
warehouse and a retail outlet. Each has
a specialization that enhances their role in
Most Central bank governors are unlikely
to agree to change their Central Banks
“mission”. Thus cryptocurrencies
are likely to be on hold for a