The Future of Money — Central Bank Digital Currencies and/or Cryptocurrencies?: Safeguarding Monetary Sovereignty and Deterring U.S.–Owned Payment System Oligopolies

Abstract

Global policymakers have been exploring either issuing a new, or developing an existing, central bank digital currency (CBDC) in order to settle retail, wholesale and cross-border transactions. A retail CBDC seems beneficial and overdue. The merit of building the financial market infrastructure for a wholesale CBDC based on distributed ledger technology is also compelling. Amidst the hype on ‘unified ledgers’, ‘smart contracts’ and ‘atomic settlement’ there has yet to emerge a consensus on the operational side. A key design issue is whether to tokenise reserves or a generic liability with broader usage aka cash. Under the Trump Administration any development of CBDCs is off-limits for federal agencies; instead, crypto is the future of money. Elsewhere there is perhaps greater urgency to fast-track CBDCs in order to lock users into arrangements that safeguard monetary sovereignty, preserve monetary and financial stability and deter U.S.-owned payment system oligopolies.