Dissolving Euro banknote
When was the last time you paid for something with cold, hard cash? While physical currency is still widely used all around the world, people in some countries have been using it a lot less lately—especially during the COVID-19 pandemic, with its cash shortages and hygiene concerns. As people shift away from cash, many are increasingly turning to digital financial transactions. Globally, banks and financial institutions process far more transactions digitally than they do in physical branches.
A variety of recent digital disruptions, including the emergence of cryptocurrencies and blockchain technology, have made waves in the financial-services sector. Digital currencies are part of that story, and central banks have started to take note.
Central bank digital currencies (CBDCs) are the digital form of a government-issued currency that isn’t pegged to a physical commodity. They are issued by central banks, whose role is to support financial services for a nation’s government and its commercial-banking system, set monetary policy, and issue…