![]() These developments show how innovation can thrive on the basis of sound money provided by central banks. Examples of FPS include TIPS in the euro area, the Unified Payments Interface (UPI) in India, PIX in Brazil, CoDi in Mexico and the FedNow proposal in the United States, among many others. FPS also support a vibrant ecosystem of private bank and non-bank payment service providers (PSPs, see glossary). A growing number of jurisdictions (over 55 at the time of writing) 3 have introduced retail FPS, which allow instant settlement of payments between households and businesses around the clock. Central banks around the world have instituted real-time gross settlement (RTGS) systems over the past decades. Many recent payment innovations have built on improvements to underlying infrastructures that have been many years in the making. Throughout the long arc of history, money and its institutional foundations have evolved in parallel with the technology available. The fifth section discusses the international dimension of CBDCs, including the opportunities for improving cross-border payments and the role of international cooperation. The fourth section explores the principles behind design choices on digital identification and user privacy. The third section discusses the appropriate division of labour between the central bank and the private sector in payments and financial intermediation, and the associated CBDC design considerations. The second section lays out the unique properties of CBDCs as an advanced representation of central bank money, focusing on their role as a means of payment and comparing them with cash and the latest generation of retail FPS. To set the stage, the first section discusses the public interest case for digital money. The chapter also outlines how CBDCs compare with the latest generation of retail fast payment systems (FPS, see glossary). It presents the design choices and the associated implications for data governance and privacy in the digital economy. The chapter sets out the unique features of CBDCs, asking what their issuance would mean for users, financial intermediaries, central banks and the international monetary system. 1 CBDCs can be designed for use either among financial intermediaries only (ie wholesale CBDCs), or by the wider economy (ie retail CBDCs). CBDCs are a form of digital money, denominated in the national unit of account, which is a direct liability of the central bank. This chapter examines how central bank digital currencies (CBDCs) can contribute to an open, safe and competitive monetary system that supports innovation and serves the public interest. This raises issues of data governance, consumer protection and anti-competitive practices arising from data silos. An essential by-product of the digital economy is the huge volume of personal data that are collected and processed as an input into business activity. ![]() Alongside a broader trend towards greater digitalisation, a wave of innovation in consumer payments has placed money and payment services at the vanguard of this development. Multi-CBDC arrangements could surmount the hurdles of sharing digital IDs across borders, but will require international cooperation.ĭigital innovation has wrought far-reaching changes in all sectors of the economy.
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