Central Bank-Issued Digital Currency: Assessing Central Bank Perspectives of DLT and Implications for Fiat Currency and Policy Stimulus

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10 October 2016
John Dwyer

Abstract

Celent has released a new report titled Central Bank-Issued Digital Currency: Assessing Central Bank Perspectives of DLT and Implications for Fiat Currency and Policy Stimulus. The report was written by John Dwyer, senior analyst in Celent’s Securities & Investments practice.

On 28 September 2016, the Financial Services Committee met with Federal Reserve Chair Janet Yellen at the Semi-Annual Testimony on the Federal Reserve’s Supervision and Regulation of the Financial System. Yellen informed the committee members that blockchain could have very significant implications for the payments system, and innovation using these technologies could be extremely helpful and bring benefits to society.

This is further evidence of the significant and growing interest of central banks in blockchain / distributed ledger technology (DLT), but what is much less understood is how such technology could transform the role of central banks and commercial banks.

“Central bank-issued digital currencies present an opportunity to re-architect the financial system to achieve key central bank objectives. The perceived benefits include a new payments system, granular data on key macroeconomic variables, expansion of the policy stimulus toolkit, and improved prudential regulation. Given the prevalence of unorthodox monetary policies and their influence on banking and capital markets, understanding the perspectives of the central bank constituency is critical to understanding the potential impact of DLT upon the financial system,” says Dwyer.

This is the second in a series of three reports on distributed ledger technology. The final report will compare fiat currency, Micro Gold, and cryptocurrencies as competition for payments systems, storing value, and money itself continues to unfold.

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Insight details

Content Type
Reports
Focus
Industry Trends, Innovation & Emerging Technology, Technology trends
Location
EMEA