More than Money: Central Bank Digital Currencies

The approximate status of currency digitalization by country compiled from BIS, Atlantic Council, and the CBDC tracking project. Note that some countries have canceled projects only to pursue new projects at the retail or wholesale level. For an up-to-date visualization visit cbdctracker.org.

Note: a version of this article will be appearing in Wealth and Investment Monitor in Feb 2023.

Our monetary system is being disrupted by cryptocurrencies, perhaps for good, but it seems like mainly for worse in days of late.

These “network-made” assets now account for about 5–7% of the world’s money and are not controlled by any central authority or payment services provider. Cryptocurrencies allow fast settlement and cross-border transactions for anyone with an internet connection and a mobile phone. [Note: In the interest of readability and length. I have a made several abstractions and have not addressed critiques of so-called cryptocurrencies (mainly that they are not useful as currency).]

In many ways, cryptocurrencies don’t help the unbanked get bank accounts but instead turn them into banks, with the ability to “mine” cryptocurrencies into existence and transfer assets without any central server or authority.

During the past four years, governments around the world have been responding with regulations and “crypto-like” updates to their currencies known as Central Bank Digital Currencies (CBDCs).

CBDCs are not cryptocurrencies but are digital dollars that may exhibit some of the same characteristics as cryptocurrencies. Public blockchains like Bitcoin…