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Are central bank digital with up to 86 percent of these institutions considering the
development of their digital currencies. China has already
currencies the next big conducted trials of CBDC in several cities, the European
Central Bank anticipates deciding on the digital euro this
summer, and the Federal Reserve Bank of Boston plans to
disruption? unveil its preliminary research in the fall.

By Sofia Sadiq What prompts this sudden interest among central banks
in launching digital currencies? Several factors explain
ATM Industry Association this growing interest in launching digital currencies by
central banks:
[Editor's note: This article was originally published on Mon., Dec. 18, 1. Monetary sovereignty: The rapid expansion of private
2023, by the ATM Industry Association (ATMIA). Copyright (c) 2023 by payment networks raises concerns for central banks, as
ATMIA. Reprinted with permission.] these networks could become dominant in transactions,
entral bank digital currencies, commonly potentially threatening their control over the global
known as CBDCs, represent a novel form of monetary system.
digital currency designed to supplant physical 2. Financial stability: The failure of a private provider
C cash. It's crucial to differentiate digital curren- of digital cash could disrupt the payment system and
cies from cryptocurrencies, as the former, like stablecoins, destabilize the financial system. Central banks aim to
are typically linked to an underlying asset, while the lat- mitigate this risk by issuing their own digital currencies,
ter, such as bitcoin, rely on blockchain technology. ensuring the reliability of the medium of exchange.
3. Financial inclusion: The rise of exclusive private
CBDCs, in essence, function precisely as their name money networks may exclude segments of the
suggests: they are a digital manifestation of currency population, such as the unbanked. CBDCs, similar to
issued and guaranteed by a central bank, maintained in a physical cash, can promote broader availability and
centralized ledger—a form of digital cash. foster greater financial inclusion.
The current spotlight on CBDCs is driven by a surge in
global central banks exploring their implementation,

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