Central Bank Digital Currencies (CBDCs) are digital representations of sovereign currency that is issued by a monetary authority.
CBDCs can be broken down into retail CBDCs, which are available to the public use, and wholesale CBDCs, which are limited to a set of pre-defined user groups, typically financial institutions to settle large value transactions.
94 central banks are exploring today CBDC
According to the report of OECD, 94 central banks are exploring today CBDCs, and more than a quarter of them are developing or running pilots of retail or wholesale CBDC issuance.
The discussions around CBDCs are intensifying and the feasibility of issuing digital public money is increasing. As a part of the monetary system, CBDCs represent public goods.
In light of efforts of many central banks to develop CBDCs, attention needs to be drawn to the major design and implementation characteristics that will promote CBDCs that abide by democratic value.
The most important areas of focus are: 1) civil liberties and human rights, 2) equitable treatment – availability, accessibility and affordability, 3) privacy and integrity, 4) trust – security and transparency.