CBDC Speeda

CBDC

Central Bank Digital Currency (CBDC)

Cryptocurrencies

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 This report explores the demand drivers of both wholesale and retail CBDC, the motivations and technologies underlying them, and their diverse applications. It delves into wholesale CBDC at a global level and into retail CBDC with a strong focus on China, owing to the higher use cases in China compared to other countries worldwide.
 
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 1
 . Two forms of central bank digital currency
 : Central Bank Digital Currency (CBDC) is a digital representation of a country's fiat currency issued by a central bank (CB) to serve as a legal tender. CBDC can be categorised into two types based on usage&mdash;wholesale and retail&mdash;according to the Bank for International Settlements (BIS). 
 
 
 2. 
 Need to slash costs while heightening efficiency and security in cross-border wholesale transactions: 
 The common objective of wholesale transactions is to facilitate large-scale transactions and settlements among financial institutions. Compared to the existing alternatives, wholesale CBDC is more effective, promising real-time cross-border payments, cost savings, regulatory adherence, and anti-money laundering compliance.
 
 
 3. 
 Blockchain Technology and digital identity verification enable CBDC Development: 
 The development of CBDCs was possible due to the leveraging of key technologies that were not entirely new but adapted to suit the unique requirements of CBDC development. 
 
 
 4. 
 Governments&rsquo; financial and economic goals underpin push for retail CBDC: 
 Governments drive the creation of retail CBDCs to achieve financial and economic objectives. These digital currencies address economic instability, curb illicit activities, enable targeted monetary policies, and ensure public access to CB money amid decreasing physical cash usage. 
 
 
 5. 
 CBDCs face challenges relating to technical glitches: 
 Notable examples include issue is the occurrence of technical glitches in standalone CBDC apps, as reported by customers of 
 <a href="https://www.ub-speeda.com/company/companyinformation/cid/SPD1ZD1SLYXOQLZE?5">
 HDFC Bank
 </a>
 (IND), 
 <a href="https://www.ub-speeda.com/company/companyinformation/cid/SPD22N26UXYC2N5O?7">
 ICICI Bank
 </a>
 (IND), 
 <a href="https://www.ub-speeda.com/company/companyinformation/cid/SPD3RF51VLPSQLY7?9">
 Yes Bank
 </a>
 (IND), 
 <a href="https://www.ub-speeda.com/company/companyinformation/cid/SPD2LIZ3DWZDP59Y?11">
 Bank of Baroda
 </a>
 (IND), and 
 <a href="https://www.ub-speeda.com/company/companyinformation/cid/SPD21N82LIVP9TBM?13">
 IDFC First Bank
 </a>
 (IND) during the retail digital rupee pilot in April 2023. 
 
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EDGE Insights