CENTRAL BANK DIGITAL CURRENCY (CBDC) FORMATS AND THEIR IMPLICATIONS

Hazik Mohamed

Chapter 9 in Beyond Fintech:Technology Applications for the Islamic Economy, 2020, pp 165-176 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Digital currencies using distributed ledgers can be a digitized version of currency while retaining its four major features: (1) anonymity, (2) peer-to-peer (P2P) exchangeability, (3) universality, and (4) a steady titular value. There is a variety of potential solutions (formats) that can be adopted depending on the attributes and impact of each format on the financial system. This chapter characterizes and examines the benefits, opportunities, costs, and challenges of four key formats, and gives its assessment on the feasibility as well as possibility of practical adoption. Finally, it recommends the adoption of a CBDC (non-universal) for the interbank settlement and wholesale payment systems which has a minimal disruption to the economy, stronger monetary policy transmission and suggests way forward for adoption of an interest-free monetary system.

Keywords: Ethics and Technology; Digital Transformation; Regional Development; Customer Behaviour; Evolution of FinTech; Global Landscape; Payments; Asset under Management; InsurTech; Investments; Cloud Computing; Big Data Analytics; Blockchain; Internet of Things (IoT); Robo Advisors; Artificial Intelligence; Machine Learning; Islamic Finance; Endowment; Intellectual Property; Fraud Detection; Risk Mitigation; Cost-Effective; Increased Productivity; Immutable; Know Your Client (KYC); Media Rights; Coordination; Efficiency; Consensus-building; Agility; Scalability; Innovation; Cybersecurity; Collaboration; Venture Capital; Enterprise Solutions; Era of Digitization; Digital Ecosystem; Disruptive Models; Market Insights; Predictive Analytics; Insurance; Takaful; Capital Markets; Distributed Ledgers (DLT); Wealth Management; Islamic Markets; Sharing Economy; Trust Mechanism; Open Platforms; Web and Mobile; Cloud Computing; Trades and Settlements; Regulatory Controls; User Defined; Institutional Economics; Cryptocurrency (Tokens); Public Registries; Smart Contracts; Securities Clearing; Automation; Enforceability; Claims Processing (search for similar items in EconPapers)
JEL-codes: G1 G11 G2 O3 O32 (search for similar items in EconPapers)
Date: 2020
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