Exploring the Impact of Central Bank Digital Currencies (CBDCs) on the Global Financial System

Transformation of Money:
Historical evolution: barter systems, minted coins, paper money, and digital transactions.
Reflects advancements in technology, governance, and economic systems.
Emergence of CBDCs:
Digital currencies issued by central banks.
Aim to improve efficiency, security, and accessibility of monetary transactions.
Potential to fundamentally alter the financial landscape globally.

1. Exploring the Impact of
Central Bank Digital
Currencies (CBDCs) on the
Global Financial System

2. Introduction
Transformation of Money:
Historical evolution: barter systems, minted coins, paper money, and
digital transactions.
Reflects advancements in technology, governance, and economic
systems.
Emergence of CBDCs:
Digital currencies issued by central banks.
Aim to improve efficiency, security, and accessibility of monetary
transactions.
Potential to fundamentally alter the financial landscape globally.

3. Understanding CBDCs
Definition:
CBDCs are digital versions of national fiat currencies.
Issued and regulated by the central bank of a country.
Characteristics:
Centralized control by the issuing authority.
Backed by the government’s credit, unlike decentralized
cryptocurrencies.

4. Understanding CBDCs
Types:
Retail CBDCs:
Available to the general public for everyday transactions.
Enhance financial inclusion and accessibility.
Wholesale CBDCs:
Used by financial institutions for large-scale interbank
transactions.
Improve efficiency and reduce settlement times in the
financial sector.

5. Potential Benefits of CBDCs
Financial Inclusion:
Digital access to banking services for unbanked and
underbanked.
Low-cost transactions enable participation in the formal
economy.
Reduced Transaction Costs:
Direct transactions reduce need for intermediaries.
Lower costs encourage business activities and economic
growth.

6. Potential Benefits of CBDCs
Enhanced Monetary Policy Tools:
Real-time economic data for better policy-making.
Improved ability to manage inflation, stabilize the economy,
and respond to financial crises.
Mitigation of Illicit Activities:
Enhanced transparency and traceability of transactions.
Stronger measures against money laundering and terrorism
financing.
Ensures regulatory compliance.

7. Challenges and Risks
Privacy Concerns:
Digital records could lead to increased surveillance.
Risks to personal data security and financial privacy.
Cybersecurity Threats:
Vulnerability to hacking and cyberattacks.
Need for robust security measures to protect digital currency
infrastructure.
Disruption of Traditional Banking:
Potential reduction in banks' traditional roles and revenue streams.
Banks may need to innovate to remain relevant.

8. Challenges and Risks
International Implications:
Major economies issuing CBDCs could shift global financial
dynamics.
Potential to challenge the dominance of existing reserve
currencies like the US dollar.
Effects on international trade and financial flows.

9. Global Impact of CBDCs
Emerging Markets:
Opportunity to bypass traditional banking infrastructure.
Potential to stabilize currencies and promote economic growth.
Cross-Border Payments:
Streamlined international transactions.
Faster, cheaper, and more efficient settlements.
Benefit to global trade and economic integration.

10. Global Impact of CBDCs
Geopolitical Dynamics:
Nations competing for influence in the digital currency arena.
Potential for new economic alliances and power shifts.
Regulatory Harmonization:
Need for global cooperation on standards and regulations.
Ensuring smooth integration and minimizing systemic risks.
Establishing frameworks for CBDC issuance and circulation.

11. Thank you.