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Will central-bank digital currencies break the banking system?
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Will central-bank digital currencies break the banking system?

Perhaps. But that might not be so bad.



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China issued its digital yuan in early 2021, beating other countries in launching a central bank digital currency (CBDC). The move acknowledges that cryptocurrencies – now a $2 trillion market – are here to stay. In this brief but expert sketch, The Economist examines whether CBDCs can not only compete with bitcoin, ETH and other digital assets but also if they will disrupt the traditional financial system. Bankers, financial professionals and digital currency stakeholders will find this an insightful analysis.

Take-Aways

  • A central bank digital currency (CBDC) is a virtual form of money, but it affects banks differently than cash does.
  • CBDCs could change the relationship between central banks and traditional banks.
  • Policy experts are working on solutions for potential CBDC disruptions.

About the Author

The Economist is an independent weekly magazine covering business, foreign affairs, science and technology.