CBDC: a Solution in Search of a Problem?

An interesting Finextra article examines whether CBDCs are being planned without public support, the ‘solution in search of a problem’ conundrum ¹. There are though, two distinct issues: the policy rationale (the fundamental problems a CBDC aims to address) and the use cases (why individuals might actually adopt it).

A diverse range of policy objectives – from promoting innovation and competition to improving resilience and supporting financial inclusion – are often suggested, even though many could be achieved through other means.

However, a core policy argument addresses the more fundamental issues stemming from the unique role of public (central bank) money and the delicate balance between public and private money that underpins the monetary systems. This rationale has been at the core both of the UK’s rationale for the digital pound and the ECB’s push for the digital euro.