Hundreds of central bank digital currency (CBDC) projects are underway globally for retail and wholesale end uses. Treasurers now have to think about the future of money, as digitalisation advances and interoperability becomes key. TMI examines the emerging CBDC area and its impact on treasury.
Value exchange will look different next decade, as private stablecoins proliferate and digital money and marketplaces advance, alongside tokenisation and programmable money. The underlying blockchain and DLT will cause a revolution in financial services (FS). CBDCs are a part of this emerging and overlapping DLT field and may constitute the end game for it.
For most corporate treasurers, the key change in the DLT currency area will be when there is a public digital pound, dollar or euro, a so-called retail central bank digital currency (rCBDC), as opposed to a private Bitcoin (BTC) type cryptocurrency or a stablecoin linked to it, or another digital asset, created in order to reduce volatility. This new rCBDC form of domestic cash replacement money will battle private cyptocurrencies but require cross-border linking mechanisms, however, just as happens with existing digital fiat money. Physical cash itself is likely to be retained at least initially for public acceptance purposes, although further decline as a percentage.
A European Central Bank (ECB)-backed digital euro could be in circulation by 2027, according to a recent update from one of the key participants, Banque de France (BdF). The digital euro is now officially in its preparation phase, although it will have to overcome existing e-wallets and digital money on instant payment platforms to gain widespread traction. MNCs will want it to cross borders. FIs will intermediate, although direct CBDCs via an app are possible, if undesirable.
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