The ongoing coronavirus disease 2019 (COVID-19) pandemic has shone a light on digital forms of payment. At central banks, this has given rise to what has since been called central bank digital currency (or currencies; CBDCs). At a minimum, CBDC has the potential to replace the traditional role of notes and coins in circulation. However, CBDC also creates the possibility that additional services provided through digital technology can be added. At the global level, CBDC can ease the burden and costs of transacting in different currencies, thereby facilitating, if not encouraging, cross-border payments. The latter is deemed a priority issue of the Group of Twenty (G20).
This paper addresses three main issues:
- Should the data-gathering activities of central banks be separated from other central banking activities?
- Do current governance arrangements, limited to G20 economies, constrain the introduction of CBDC?
- How is central bank autonomy impacted, or our understanding of the concept influenced, by the creation of CBDC?
Policy implications are also drawn, and suggestions for going forward are provided.