Principles for a global central bank digital currency and a single global payment system
The authors of this paper – the economists working in the field of financial stability, Mihai Voicu and Irina Mihai – invite the readers, especially central bankers, to set their minds from passive-routine behaviour to pro-active, profound, responsible innovator behaviour.
Why? Well, because, on the one hand, money affects all of us and such behaviour should define human civilisation as an explorer one and, on the other hand, we should continuously improve well-being and not live by ancient laws and rules. So please don’t stop reading even if you don’t understand or don’t agree with the model…
Keep reading and keep thinking about the benefits of a new payment model from various payment stakeholders perspectives (depending on your position – central banker, regulator, supervisor, overseer, banker, fintech company, payment services provider to financial institutions, payment services user, technology developer, finance professor/lecturer, student, journalist etc). And imagine such payment model existed and worked for everybody, enhancing market discipline, efficiency and fairness to all stakeholders. Or, even more, challenge and improve the payment model.
This paper is a result of major thinking outside the box. It proposes a single retail central bank digital currency (CBDC) to be used around the globe as a legal tender, issued based on an arrangement among all central banks/governments.
Everyone should have direct, instant and affordable access to a CBDC account and/or token based CBDC with a central bank, depending on the agreed CBDC design by all central banks/governments.
A single efficient and resilient global 24/7 running payment system should allow consumers and businesses to initiate CBDC payment orders (domestic and cross-border) directly and/or through a third party, to any other CBDC account and/or token-based CBDC.
The global payment system should be equipped with an instant CBDC settlement facility in central bank money and it should replace all current payment/settlement arrangements.
This paper delves into the following:
- motivation for a single retail CBDC;
- issuance and design;
- accessibility and circulation/distribution;
- legal tender;
- instant settlement;
- efficiency and security;
- governance and legal issues;
- main implications for different agents in the economy, i.e. central banks, governments, financial institutions and the public.