JP Koning offers a Canadian perspective on the need for a CBDC that identifies two issues with the idea and concludes it is not a priority.
His argument rests on two planks. Firstly he argues that the existing payment infrastructure in Canada is pretty good so the obvious question is whether the CBDC is really worth the required investment of public resources. Secondly he highlights the operational and governance problems associated with payments that lie outside a central bank’s core area of competence.
His post also links to an article by David Andolfatto that arrives at similar conclusions. David however adds the qualification that a wholesale CBDC might be worth pursuing.
Neither post introduces anything radically new into the discussion of CBDC so far as I can tell but they are worth reading to get a Canadian perspective. The key points the articles reinforced for me where:
- That the need for financial innovations like a CBDC (or indeed payment stablecoins) depends a lot on how good the existing payment rails are. Some countries have pretty good systems but others (which surprisingly seems to include America) are not keeping up with best practice.
- Cross currency payments is an area that appears ripe for disruption and a wholesale CBDC might have a role to play in this process.
Tony – From the Outside