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Wholesale financial markets and digital currencies: making headway in the tokenisation of central bank money

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  • Sergio Gorjón

Abstract

The interest taken by central banks, and by society at large, in central bank digital currencies (CBDCs) has grown notably in recent years. Although the greatest efforts have focused on studying and experimenting on a new class of monetary liability with universal access (i.e. retail), a second variant, namely a wholesale or interbank CBDC, is gaining ground by leaps and bounds. Specifically, almost 20 monetary authorities are already actively exploring this field with the aim of determining whether or not wholesale CBDCs can enhance the efficiency, flexibility and security of the clearing and settlement process for payments and securities (including in cross-border transactions) and of the associated risk management procedures. These experiences, in turn, highlight the numerous practical and legal challenges that have yet to be resolved and illustrate a possible path for taking full advantage of them. This article analyses the characteristics of the initiatives that have made the most progress to date, placing particular emphasis on the most important lessons learnt.

Suggested Citation

  • Sergio Gorjón, 2022. "Wholesale financial markets and digital currencies: making headway in the tokenisation of central bank money," Financial Stability Review, Banco de España, issue Spring.
    • Handle: RePEc:bde:revisl:y:2022:i:5:n:4
    Note: 42
    as

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    File URL: https://www.bde.es/f/webbde/GAP/Secciones/Publicaciones/InformesBoletinesRevistas/RevistaEstabilidadFinanciera/22/4_FSR42_Divisas.pdf
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    References listed on IDEAS

    as
    1. Lilas Demmou & Quentin Sagot, 2021. "Central Bank Digital Currencies and payments: A review of domestic and international implications," OECD Economics Department Working Papers 1655, OECD Publishing.
    2. Anneke Kosse & Ilaria Mattei, 2022. "Gaining momentum – Results of the 2021 BIS survey on central bank digital currencies," BIS Papers, Bank for International Settlements, number 125.
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