A Note on Central Bank Digital Currencies (CBDCs)

This note provides an overview of central bank digital currencies (CBDCs), digital forms of sovereign money issued by central banks. It examines the motivations driving CBDC development, including monetary sovereignty, financial inclusion, payment system efficiency, and cross-border payments, while also analyzing key risks, including weak adoption, bank disintermediation, privacy concerns, cybersecurity vulnerabilities, and geopolitical fragmentation. Drawing on examples from China, the Eurozone, India, Nigeria, the Bahamas, Australia, and the United States, the note compares alternative CBDC designs and implementation strategies. It concludes by exploring how CBDCs, stablecoins, and other forms of digital money may shape the future.