![]() ![]() Visitors and athletes could use the currency to make purchases within the Olympic Village.Īnother model is the one under consideration by the European Central Bank in which licensed financial institutions each operate a permissioned node of the blockchain network as a conduit for the distribution of a digital euro. China showcased e-CNY during the 2022 Olympic Games in Beijing. At the opposite end of the spectrum is China’s e-CNY, a CBDC pilot that relies on private-sector banks to distribute and maintain digital-currency accounts for their customers. With DCash, consumers hold deposit accounts directly with the central bank. One type of CBDC is an account-based model, such as DCash, which is being implemented in the Eastern Caribbean. There’s no one type of CBDC a wide variety of approaches are being piloted in various countries. What are the different types of CBDCs, and where are they currently in use? Learn more about McKinsey’s Financial Services Practice. Unlike cryptocurrencies, which are decentralized, CBDCs are state issued and operated. Stablecoins are a specific type of private, stabilized cryptocurrency pegged to another currency, commodity, or financial instrument with the goal of maintaining a relatively stable value over time. Examples of central banks include the US Federal Reserve System, the Bank of Japan, the People’s Bank of China (PBOC), and Germany’s Deutsche Bundesbank.ĬBDCs are similar to-but not the same as-stablecoins. They are issued by central banks, whose role is to support financial services for a nation’s government and its commercial-banking system, set monetary policy, and issue currency. Digital currencies are part of that story, and central banks have started to take note.Ĭentral bank digital currencies (CBDCs) are the digital form of a government-issued currency that isn’t pegged to a physical commodity. Globally, banks and financial institutions process far more transactions digitally than they do in physical branches.Ī variety of recent digital disruptions, including the emergence of cryptocurrencies and blockchain technology, have made waves in the financial-services sector. As people shift away from cash, many are increasingly turning to digital financial transactions. When was the last time you paid for something with cold, hard cash? While physical currency is still widely used all around the world, people in some countries have been using it a lot less lately-especially during the COVID-19 pandemic, with its cash shortages and hygiene concerns.
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