“86% of central
bank respondents to a survey at least researching the topics (Boar and Wehrli 2021), and more
than 46 having launched design reports or prototypes .”

The Rise of CBDCs

Global Innovation

There is no topic more widely discussed in central banking than CBDCs. A CBDC global adoption sets to revolutionise banking, money, and financial services; and with it the world economy. 

Key to these considerations is the entire framework of how confidence is maintained via lending, and how cash is used.

Today, the main role of the central bank is to control the economy via discount rates to commercial banks and to guarantee the actual cash value in circulation (in conjuction with commercial banks). 

The current framework has key risks, namely related to insolvency. Large banks have failed, and many banks have needed central bank or government support to stay in business. 

This risk, and the rapid decline of cash, in conjunction with a changing and highly competitive world, which is cross-border transaction based now rouetinely, is pressuring central banks to enact change on a scale not seen since the 1600s.


A large driver is the introduction stablecoins, coins whose value is pegged to a fiat value, but privately issued and controlled. These coins not only take control of monetary policy to some degree away from the central bank, but they pass it private companies operating overseas and outside of the control of the legal system under which the central bank operates.

Proposals are today wide ranging, and highly diverse proposals for how CBDCs would be implemented – the only clear fact so far is that the impact of a digital currency maintained by a central bank would be far reaching and life changing for billions of people. 

One of the key changes will be access to finance (now not available to about 2 billion people), and the enablement of cross-border payments which would be almost instant and at a low cost.

A key consideration is lending. Today that is done by banks to retail customers who borrow based on the bank’s role to create new money.

Prevailing views are that lending should be preserved by banks to maintain money creation and growth in the economy.

The key question is what is loaned. Today e-money is loaned, which is trusted and also subject to risk of bank insolvency. That could be changed to lending of digital currency, but the details of that are far from certain as are many aspects of CDBCs.