Central Bank Digital Currencies – an Innovation in the Realm of Money

Abstract

Payment services are one of the core central banking activities. Payment related inno vations promote safe and sound payment systems that are allowing faster transactions. Central bank digital currencies (CBDCs) have potential to revolutionize the payment system while having effects on the monetary policy and financial stability. Currently, many of the leading central banks in the world are considering the possibility for launch of CBDCs. The paper analyses the phenomenon of the CBDCs. It aims to examine the role of the central banks in the realm of digital money while exploring their design as an alternative for cash. The legal basis for issue of the CBDCs, the relation with the legal tender in the country and other legal issues are particularly examined.