Current and Future Central Bank Digital Currency (CBDC) Projects

Abstract

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Central Bank Digital Currencies (CBDCs) are monetary projects of digital public money at different stages of development, whose issuance corresponds to central banks. It is a digital representation of money with fiat currency’s legal nature. Still, like cash, and unlike electronic bank money, it has the guarantee of a central bank and not a deposit guarantee fund. This means that the monetary authority is responsible for the conditions of its issuance, distribution and value, as well as the network or infrastructure that supports its operation and possible programmability, whether retail (rCBDC) or wholesale (wCBDC). Among the most important examples of CBDC projects are the Chinese digital yuan and the digital euro, the latter still undergoing the study (or preparation) phase by the European Central Bank. The objective of this paper is to carry out a conceptual and comparative study on the development of these and other CBDC projects, providing a regulatory analysis of the consequences that the implementation of this new monetary and technological reality will bring to the banking system, as well as the impact that these digital currencies have on the banking market, the protection of users and their relationship with the rest of the Fintech environment. It will also discuss some of the initiatives taking place at the international level, such as the projects within the BIS Innovation Hub to address different issues that will define the final configuration of CBDCs in the near future