More than a decade ago, in autumn of 2008, pseudonymous programmer Satoshi Nakamoto published a white paper describing the plan and protocol for a decentralized digital currency. Nakamoto vanished into thin air, but the technology he created, Bitcoin, went on to change our financial world.
And while central bank digital currencies will represent an evolution within the currency industry, the path to their creation is not linear. Indeed, physical cash remains the world’s most popular means of payment.
Commercial payment offerings are becoming increasingly varied, and many people appreciate convenience, and additional benefits. However, cash and the – for the general public – still visionary concept of central bank digital currencies are public goods and accessible to all parts of society without barriers – regardless of social status, creditworthiness, age, gender, nationality, or ability.
Throughout history, currencies have been a statement of trust in central banks as the issuing institutions. Fiat money is guided by public interest with the objective to maintain stability, reduce risks for the public and ensure growth and prosperity. This goes for cash – and also applies to CBDCs. Together they form the public payment infrastructure for digital and physical payments and are therefore essential for a healthy and diverse payment ecosystem, so that people can choose freely between different payment methods today and in the future.
Sometimes, habits change faster than we expect. This was highlighted by the Covid-19 pandemic, which simultaneously demonstrated a rise in contactless payments and an increase of volume of physical cash hoarded by people. To adapt to this evolving landscape and people’s needs, industry players must ensure that they have flexibility built into their operations.