Publication: Central Bank Digital Currency: Background Technical Note

Thumbnail Image
Files in English
English PDF (3.4 MB)

English Text (130.94 KB)
World Bank
In recent years, due to innovations in technology, the concept of digital currency has emerged out of the desire of some private entities to replicate specific properties of cash in the digital space. Digital currencies have been issued in various electronic formats and value propositions, and in an uncountable number of platforms, which allow for real-time, peer-to-peer and not-in-person transactions. Digital currencies, especially those that have an embedded decentralized payment mechanism based on the use of distributed ledger technology (DLT), can have a range of impacts on various aspects of financial markets and the wider economy. Central banks, too, are considering issuing their own digital currencies. A central bank digital currency (CBDC) is a central bank liability that is digitally created and recorded on centralized or decentralized ledgers, denominated in an existing unit of account, and convertible in physical cash, commercial bank money and other forms of money on demand by the holder at authorized entities. This report discusses the main technical features of domestic retail CBDC and its potential implications. The report is organized as follows. Section 2 will provide a general description of CBDC as they have evolved in the literature. Section 3 will discuss the economics of CBDCs, in particular it will explore the implications of CBDC for monetary policy, financial stability, financial intermediation, payments and settlements, financial integrity, and financial inclusion in general, and in the context of a developing economy as well as the potential efficiency gains from the use of CBDCs. Section 4 will evaluate the legal and regulatory aspects. The last section will conclude, raising issues for further analysis.
Link to Data Set
World Bank. 2021. Central Bank Digital Currency: Background Technical Note. © World Bank, Washington, DC. License: CC BY 3.0 IGO.
Report Series
Other publications in this report series
Journal Volume
Journal Issue
Associated URLs
Associated content