Dr. Eswar Prasad

So retail CBDCs or central bank digital currencies are a very interesting innovation.

Now, the reality that many central banks face is that the use of currency for payments is declining around the world.

If you look at a country like Sweden, virtually nobody uses cash anymore.

In China, Alipay and WeChat Pay basically dominate the payment system.

They give everybody, you know, from street vendors to people with very low income levels,

easy access to a convenient low-cost digital payment system so recognizing that their currency no longer seems to be in demand central banks are beginning to think about issuing digital versions of their own money now there are countries like sweden china india that have done experimental trials of their cbdc's

It turns out that there isn't very strong demand for them.

In Sweden, which is one of the first countries to move forward with the CBDC trial, they've done all the technical preparation for issuing a digital version of the kronor, which is the Swedish currency.

The reality is that the private payment system is working so well that there isn't much demand.

And the same thing is happening in China and India.

So these countries at one level are a victim of their own success, that their private payment systems are working so well that nobody wants

the CBDC.

But these countries, at least in Sweden, it's come to a sort of grinding halt because the parliamentary committee decided that Sweden didn't need it.

In China and India, the central banks are trying to add some functionality to their CBDCs so that there will still be some demand for them.

The one area in which I think there is actually logic for a retail CBDC to go forward is the Eurozone.

because the eurozone is a curious beast.

It is a somewhat unified banking system.

It's supposed to be a unified economic system, but there is no unified payment system in the euro area.

So in fact, the European Central Bank is going forward with the digital euro.

But in most countries right now, I think we are coming to the reality