If you know nothing about China’s Central Bank Digital Currency (CBDC) initiatives the paper highlighted today may help you get up to speed.
Heng Wang, of the University of New South Wales – Faculty of Law has drawn together an impressive check-list of work to-date, scholarly articles, broker research and etcetera which covers many of the issues.
However, for the better informed there’s nothing really new here.
The big question with CBDCs is why, if they’re such a good idea (I sense they’re not) have Central Banks not charged ahead with their development and introduction? As the paper points out China first announced they’d begin a closer look in 2014 (!).
In China’s case the problem appears to be very simple. To progress a truly useful CBDC some form of anonymity would have to be part of the process and no central bank is excited about adding opacity to their financial systems (there’s a reason the largest bill issued in China is presently a mere 100-Yuan) .
In addition to the anonymity concern there are complex problems to be resolved relating to issuance, individuals and firms relationship with the central bank, bank balance sheet liability management and, perhaps the biggest question of all, how would CBDCs be better than systems already in place?
By all means have a dive into the work which is an easy if rambling read via this link China’s Approach to Central Bank Digital Currency; but with the issue having been discussed for so long with so little real progress I’m beginning to feel this is an evolutionary-fintech-branch that is already, in fact, a dead end.
Happy Sunday.