Does the digital economy demand digital money? It is clear, that money and the shape and form, which it has taken developed throughout history. From sticks and stones, to notes and computer codes.
Today, money takes a much broader definition than only cash. We have money issued by banks, we have funds to spend available via credit cards, loans and other.
With the rise of digitalisation of the global economy, there are increasingly more non-cash transactions in the world. In a sense, money is already digital- because if no cash is changing hands- then what is changing are only the entries in respective debit and credit accounts.
So what do the digital currencies mean? Besides the cryptocurrencies, today, we are seeing an increase in interest in private digital currencies and central bank- backed digital currencies. An initiative of Facebook to create a digital currency Libra is a version of private digital currency.
Today, the only money that central banks issue to us is cash money. The other money is being created by commercial banks. Therefore, if we have a retail central bank backed digital currency (Retail CBDC), it is the same as digital version of cash money.
Retail CBDC, which would be government- backed Euro, are expected to work just like regular paper/coin currency that is issued by central bank, only that it exists entirely online. China has already introduced the digital Yuan in a testing phase, while other countries- Norway, Sweden, Japan- are working on digitalizing their currencies.
‘The introduction of digital currencies may justify a fundamental shift in the architecture of a financial system, a central bank open to all’, – the U.S. Federal Reserve researchers
The Fintech Week Lithuania has invited special guests to speak about digital currencies and programmable Digital Euro: Dr. Audrius Kabasinskas, Prof. Dr. Philipp Sandner and Dr. Pavel Kravchenko. The professors will explain how the digital Euro might work, what are the plans of the global governments with regards to issuing digital currencies, and what challenges we all might face.
See and hear about Programmable Digital Euro at the Fintech Week Lithuania on 16th of June, 13:25 Vilnius, Lithuania time.