McKinsey - Central Bank Digital Currencies (CBDC)

This report provides an overview of Central Bank Digital Currencies (CBDCs), their potential advantages, and their impact on developed countries and emerging markets. The report highlights that around 80% of central banks globally are conducting research on CBDCs, with approximately 10% in a pilot-phase or development/pilot arrangement. While there is a stronger interest in retail CBDCs by central banks, most engagements currently reaching a proof-of-concept/pilot stage are in the wholesale CBDC segment. The key motivations for adopting CBDCs include market reform, capital control, market transparency, enhancing implementation of monetary policies, efficiency improvement, support for a digitalized economy, and internationalizing the national currency. CBDCs can enhance the implementation of monetary policies, eliminate settlement risks of payment, enhance capability against financial crimes and fraud, improve efficiency by eliminating intermediary value chain steps, reduce waste of capital, support a digitalized economy, and internationalize the national currency. The report also provides a case study on the People's Bank of China (PBoC) perspective on why they are developing the E-CNY (Digital Currency Electronic Payment). However, the report does not provide any information on the PBoC's perspective. Overall, the report provides valuable insights into the potential benefits and challenges of CBDCs and their impact on the global economy.