In November, we asked whether digital currencies developed and backed by the world’s central banks would seek to copy the benefits of cash, particularly the privacy and anonymity it offers. The answer, according to Sweden’s Riksbank, is a clear ‘no’.
In a staff memo made public in February, Riksbank reports central bank digital currencies (CBDCs) lack the capacity for providing offline or anonymous payments such as those offered by cash. It says that, since all CBDC payments will involve a remote ledger to keep track of ownership, ‘no CBDC can be genuinely peer-to-peer, offline and anonymous like cash.’
Many central banks exploring the possibility of a digital currency are considering a token-based approach. The memo explains a CBDC token as a digital object that has a given value expressed in the national unit of account, which makes a claim on the respective central bank. It concludes that, should such technology be pursued, it is unrealistic to expect digital currencies to offer the same benefits as cash.
