Central banks have started to actively explore central bank digital currency (CBDC) – a new digital form of legal tender that mimics cash. The first note on this by Cenfri showed there are both potential benefits and risks to this. Benefits could include:
- enhance the efficiency of national payment systems
- ease the convenience of payment processes through mobile phones as primary financial service instruments
- encourage the broad digitisation of traditionally cash-based societies
However, CBDC could undermine the financial stability, security and inclusiveness of an economy.
This second follow-up note suggests that mobile money may be a positive use case for CBDC, but it is not without potential risks. The application of retail CBDC to mobile money has the potential to foster greater interoperability, improve payment efficiency, facilitate cost-saving gains by minimising reconciliation complexity and notional costs, as well as reduce the key payment risks that are typically associated with mobile money.