4 Reasons Central Banks Should Launch Retail Digital Currencies

Digital money tracked in central bank ledgers exposes users to surveillance with little benefit.

Skeptical officials at the Bank of England say that if consumers can hold central bank money directly, they will not want to hold any money with commercial banks in a time of crisis, thus causing banks, credit and monetary policies to fail.

CBDC proponents like me argue a well-designed CBDC can increase the ability of the issuing central banks to conduct monetary and credit policy and promote financial stability, consumer protection, financial inclusion and cross-border payments.

Overall, there are four major reasons why many central banks will launch a retail CBDC over the next decade.

To Facebook's credit, unlike central banks it recognized that digital money is not about digitizing money.

Instead, if the Bank of England and the Reserve Bank of India both were to rely on a shared set of data standards for their respective digital currencies and for the corresponding digital identity infrastructure, the checks can be fully automated, reconciliations eliminated and cross border internet based payments made instant, painless, reliable and free.

Unlike commercial banks, central banks are like public utilities.

A few central banks might print money and bail out billionaires every few years, but none exist to make money.

In countries like Cambodia where banks are not very strong and most people don't have a lot of money, a central bank partnering with fintechs can give millions of people access to a robust, fast, electronic payments system.

Unlike cash and reserves, a retail CBDC will allow a central bank to become the lender of last resort for households and small businesses rather than for billionaires and banks.