The future of money: a possible role for central bank digital currencies and their implications

Speech by Mr Alexandre Tombini, Chief Representative, Representative Office for the Americas at the BIS, at the Eastern Caribbean Central Bank 40th Anniversary Global Conference and Central Banking's Autumn Meetings, St Kitts and Nevis, 9 November 2023.

Central bank digital currencies (CBDCs) have emerged as a transformative force in the world of finance and payments, offering a unique opportunity to enhance the functionality of central bank money within the digital economy. As a direct liability of the central bank, CBDCs have the potential to contribute to addressing critical challenges in payments, including improving the efficiency of domestic and cross-border payment systems and fostering financial inclusion. Several central banks across the Americas have been pioneers in this field. Notable examples of live CBDCs include the Sand Dollar introduced by the Central Bank of the Bahamas in 2020, DCash launched by the Eastern Caribbean Central Bank in 2021 and JAM-DEX launched by the Bank of Jamaica in 2022. While CBDCs hold great promise, they come with a set of challenges, including risks of financial disintermediation or a crowding out of bank deposits, digital bank runs, and potential reputational risks to central banks. Addressing these challenges requires careful design features, transaction limits, user-friendly interfaces, data protection policies and collaborative efforts.