Policy lessons from global retail CBDC projects

Nic Spearman

No 11040, Occasional Bulletin of Economic Notes from South African Reserve Bank

Abstract: Central banks world-wide are working to future-proof their role in a rapidly changing digital world. In this context, retail central bank digital currency (rCBDC) presents a potential tool for addressing key policy challenges going forward. These include monetary policy transmission, financial stability, payment system inefficiencies, and financial market failures. Addressing these challenges as well as improving integration with global payment systems are central to the SARBs strategic focus areas. Various rCBDC projects are in experimental stage working to assess policy uses and potential designs. These provide useful case studies for the SARB to understand the need for rCBDC and its potential policy spill-over effects. Understanding these impacts is important for ensuring the SARBs capacity to respond timeously and appropriately to the rapidly changing digital payment environment. For policy makers concerned by the prospect of currency substitution, a key economic lesson is that issuing rCBDC will not arrest currency substitution as it does not address the underlying economic factors that drive substitution.

Date: 2022-06-24
New Economics Papers: this item is included in nep-mac, nep-mon, nep-pay and nep-ppm
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