Thursday, 5th of March 2020, 12:00 – 1:00

Does digitalization require Central Bank Digital Currencies for the general public?

SR1, ICT Building,
Technikerstraße 21a, 6020 Innsbruck

Martin Summer
OeNB - Österreichische Nationalbank


This paper critically discusses the idea of introducing central bank digital currencies (CBDC) in view of central banks’ responsibility for monetary and financial stability. We first argue that cash cannot be digitalized without being deprived of its characteristics as an inclusive, crisis-proof and anonymous means of payment. We then lay out that much of the debate about CBDC is a debate about structural reforms of the monetary-financial system rather than technological innovation. While CBDC has the potential to increase the speed and efficiency of the payment system, it involves risks associated with financial disintermediation, centralization of credit allocation within the central bank, and bank runs. We discuss the channels through which money today acquires legitimacy as a means of payment, a store of value, and a unit of account, and we stress that it cannot be taken for granted that CBDC will achieve the same level of legitimacy that currency enjoys today.

JEL classification: E42, E58, H11, O33
Keywords: central bank digital currencies, monetary reform, digital transformation, payment systems



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