A digital transformation of the flow of money is a natural evolution from the current inefficient and risky dependence on physical cash, to a more efficient and secure digital payment system. By harnessing the potential of DLT and blockchain technology, it is possible for central banks to make this transformation.
Benefits of a Central Bank Issued Digital Currency (CBDC)
The issuance of CDBC could save central banks an estimated 90% on the costs associated with minting and issuing of physical notes and coins, secure transportation, storage and the distribution and replacement of damaged notes and coins. This means that seigniorage has the potential to increase by 90%.
Each CBDC has a unique digital serial number that allows for the central bank to track and audit. Each transaction is recorded and can be viewed and tracked in real-time, facilitating better compliance with AML and CFT frameworks.
Cryptographically produced CBDC cannot be counterfeited. Each CBDC will have its own digital serial number and the central bank digital watermark. The CBDC money supply will be exclusively issued and monitored by the central bank. The system proves authenticity through digital verification. Additionally, every transaction taking place in CBDC is instantly verified by distributed ledger for authenticity and will not be processed unless it is issued by the central bank.
Universal financial inclusion underpins eight out of the seventeen 2030 Sustainable Development Goals from the United Nations(particularly those related to poverty and inequality). The World Bank has set a goal of universal financial access by 2020. Commercial banks had prohibitive costs and requirements for products and services resulting in financial segregation. CBDC will enable users to access a broad range of affordable financial services, but this could potentially be most meaningful for the unbanked, underbanked and underserved.
Bitt’s Central Bank Management Panel Software is designed to provide real-time detailed information and reports on transaction activity, including total and speed of transactions, along with the velocity of money circulation. This gives central banks the ability to accurately monitor the effect of monetary policy actions and make adjustments accordingly.
Central bank issued CBDC will be able to facilitate lower cost transactions when compared to existing mechanisms such as wire transfers, cheques, interbank transfers, bill payments etc. Ultimately, this will lower the overall cost of doing business.
Instant issuance and distribution of Digital Dollars will eliminate the time, costs, and other challenges of distributing and managing physical cash.
In addition to monitoring, central banks can exercise a measure of control by freezing and/or blacklisting accounts or wallets as deemed fit.
Central Bank Brochure
An Introductory Guide to Bitt's Central Bank Digital Currency Issuance Solution
Enter your email to receive brochure directly to your inbox.