{
  "title": "The Ascent of CBDCs",
  "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2022/09/picture-this-the-ascent-of-cbdcs",
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  "summary": "More than half of the world’s central banks are exploring or developing digital currencies",
  "sections": [
    {
      "heading": "Overview and definition",
      "content": "- Central bank digital currencies (CBDCs) are digital versions of cash that are issued and regulated by central banks.\n- CBDCs are described as more secure and inherently not volatile, unlike crypto assets.\n- More than half of the world’s central banks are exploring or developing digital currencies."
    },
    {
      "heading": "History and current status",
      "content": "- CBDCs have been around for three decades.\n- In 1993, the Bank of Finland launched the Avant smart card, an electronic form of cash, considered the world’s first CBDC; the system was eventually dropped in the early 2000s.\n- As of July 2022, there were nearly 100 CBDCs in research or development stages and two fully launched:\n  - eNaira in Nigeria, unveiled in October 2021.\n  - Bahamian sand dollar, debuted in October 2020."
    },
    {
      "heading": "Motivations and potential benefits",
      "content": "- Primary motivations cited:\n  - Promote financial inclusion (for example, The Bahamas sought to serve unbanked and under-banked populations across more than 30 of its inhabited islands).\n  - Improve the efficiency and safety of payment systems.\n- Potential benefits highlighted:\n  - Create greater resilience for domestic payment systems.\n  - Foster more competition, which may lead to better access to money.\n  - Increase efficiency in payments and lower transaction costs.\n  - Improve transparency in money flows.\n  - Could help reduce currency substitution (use of a foreign currency in addition to, or instead of, a country’s own)."
    },
    {
      "heading": "Risks, constraints, and policy considerations",
      "content": "- Central banks must determine whether there is a compelling case to adopt CBDCs, including whether there will be sufficient demand; some central banks have decided not to adopt them for now, and many are still grappling with this question.\n- Issuing CBDCs involves risks that central banks need to consider:\n  - Users might withdraw too much money from banks all at once to purchase CBDCs, which could trigger a crisis.\n  - Capacity to manage risks posed by cyberattacks must be weighed.\n  - Ensuring data privacy and financial integrity is a critical concern.\n\nF&D Magazine — ANDREW STANLEY, September 2022\n\n---\n\n Content in this bundle\n\n- The Ascent of CBDCs\n  - The Ascent of CBDCs (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - The Ascent of CBDCs (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2022/09/picture-this-the-ascent-of-cbdcs"
    }
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    "Authors: ANDREW STANLEY",
    "Published: September 1, 2022",
    "Central bank digital currencies (CBDCs) are digital versions of cash that are issued and regulated by central banks.",
    "CBDCs are described as more secure and inherently not volatile, unlike crypto assets.",
    "More than half of the world’s central banks are exploring or developing digital currencies.",
    "CBDCs have been around for three decades.",
    "In 1993, the Bank of Finland launched the Avant smart card, an electronic form of cash, considered the world’s first CBDC; the system was eventually dropped in the early 2000s.",
    "As of July 2022, there were nearly 100 CBDCs in research or development stages and two fully launched:",
    "Primary motivations cited:",
    "Potential benefits highlighted:",
    "Central banks must determine whether there is a compelling case to adopt CBDCs, including whether there will be sufficient demand; some central banks have decided not to adopt them for now, and many are still grappling with this question.",
    "Issuing CBDCs involves risks that central banks need to consider:",
    "**The Ascent of CBDCs**"
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