95 percent of the world economy (measured by GDP) is exploring the idea of launching a central bank digital currency (CBDC), and many countries including Nigeria and China are entering into the close-to-launch or fully launched phase. But what is the hype about?
In this episode of the Sound of Economics,
Maria Demertzis invites
Grégory Claeys and
Josh Lipsky to discuss the purpose of having a CBDC from both a retail and a wholesale perspective. Particularly, they raise the geopolitical importance of CBDCs, with the example of the G7’s financial sanctions against Russia that ruled out several Russian banks from the SWIFT system and froze Russian Foreign Exchange Reserves.
However, if CBDCs are largely implemented, whilst they could help the EU achieve more autonomy in international finance, they could also be used by countries to bypass western sanctions and challenge the dollar hegemony in the current international financial system.
