Central bank money refers to liabilities of a central bank, representing the foundational form of currency in an economy. This includes physical banknotes and digital reserves held by commercial banks at the central bank. It serves as the ultimate settlement asset for interbank transactions and forms the basis for monetary policy implementation. This sovereign money contrasts with commercial bank money, which constitutes claims on private financial institutions.
Context
Discussions around central bank digital currencies (CBDCs) highlight central bank money’s potential evolution into a widely accessible digital form. Such initiatives are currently being explored globally to modernize payment systems and maintain monetary sovereignty in an increasingly digital financial landscape. The implications for existing digital assets and private stablecoins are a significant point of policy debate.
This initiative strategically integrates DLT for digital bond issuance and settlement via wholesale CBDC, optimizing capital market efficiency and validating a new operational paradigm for institutional finance.
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