CBDC Policy Considerations

CBDC Policy Considerations

Sabrina Rochemont

25 years: Digital payments specialist

The introduction of central bank digital currencies (CBDCs) pose a number of questions around how CBDCs might impact the stability of the financial system. There are several proposed policies that might address the risk. In this video, Sabrina will introduce some of these policies. Sabrina will also outline the impact on monetary policy and privacy. The question around new technologies surrounding digital currencies and the existing central bank infrastructure will also be discussed.

The introduction of central bank digital currencies (CBDCs) pose a number of questions around how CBDCs might impact the stability of the financial system. There are several proposed policies that might address the risk. In this video, Sabrina will introduce some of these policies. Sabrina will also outline the impact on monetary policy and privacy. The question around new technologies surrounding digital currencies and the existing central bank infrastructure will also be discussed.

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CBDC Policy Considerations

15 mins 49 secs

Overview

In this video, Sabrina Rochemont analyses how central banks might implement CBDCs and how they might affect the financial system. Sabrina explores the impact of CBDCs on fractional reserve banking, as banks are currently the main creators of money. One of the concerns around CBDCs is that they might reduce the ability of banks to create money, in turn reducing the loans banks can offer and inadvertently increasing the interest rates bank charge. Sabrina outlines several policies that she thinks may combat these risks to the traditional banking system.

Key learning objectives:

  • Understand the impact CBDCs might have on the traditional banking system

  • Recognise how policies could be used to mitigate the risk to the traditional banking system posed by CBDC implementation

  • Identify the arguments for and against the use of a retail CBDC in an advanced economy

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Summary
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Expert
Sabrina Rochemont

Sabrina Rochemont

Sabrina Rochemont is an experienced IT Service Management Professional. She has been researching the digitisation of payments and the possible evolution toward a cashless society for a working party. She is co-author of several papers on the topic of cashless societies including "A cashless Society - Benefits, risks and issues”, published in 2018 and “Understanding Central Bank Digital Currencies”, published in 2019. She’s also co-authored several other papers covering many aspects of the topic such as the environmental impact of payments.

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