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Fast payments and central bank digital currencies: rivals or partners?
Dec 3, 2024
Holti Banka, a Senior Financial Sector Specialist at the World Bank, tackles the intriguing relationship between fast payments and central bank digital currencies (CBDCs). He highlights how these two systems can either clash or collaborate. The discussion reveals their shared goals and distinct impacts on policy. They delve into the research on retail CBDCs and fast payments, exploring implementation challenges and the crucial role of central banks. The conversation wraps up with insights into future innovations, emphasizing regulatory needs and cross-border interoperability.
12:55
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Quick takeaways
- Fast payments and central bank digital currencies operationally facilitate low-cost transactions, but differ fundamentally in their underlying monetary structures.
- Central banks play a crucial role in the successful implementation and governance of fast payment systems and CBDCs, requiring clear objectives and stakeholder collaboration for effective adoption.
Deep dives
Comparison of Fast Payments and CBDCs
Fast payments and central bank digital currencies (CBDCs) share significant similarities in their functionality, primarily facilitating immediate and low-cost transactions. However, the distinction between them lies in their underlying structure, where fast payments utilize commercial bank money, whereas CBDCs represent direct liabilities of central banks. This fundamental difference leads to varied policy implications and risk management strategies for central banks as they consider implementing either or both systems. Insights from interviews with central banking staff across diverse global jurisdictions highlight the contextual nature of these choices and the necessity for a tailored approach based on existing market structures.
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