A recent study conducted by the World Economic Forum (WEF) on central bank digital currencies (CBDCs) found that 98% of global central banks are exploring CBDCs to improve access to central bank money (CeBM) and enhance its modernization.
Many are asking if CBDCs are the key to a more efficient global financial system?
CBDC stands for central bank digital currency. It is a digital form of fiat money, like USD, GBP, or EUR. CBDCs fall into two main types: retail and wholesale.
Retail CBDCs are meant for regular people and businesses to use in everyday transactions, while wholesale CBDCs (wCBDCs) are tailored for financial institutions and function much like central bank reserves.
CBDCs Empower Banks
According to the WEF’s study, CeBM could bring benefits like eliminating credit and liquidity risks, facilitating final settlements, and promoting financial stability.
The study also identified several problems with the…