The Digitalisation of Money

Categories : Digital Money and payments, Technology and Operational Enablers


Author: Bank of International Settlements

The ongoing digital revolution may lead to fundamental changes to the traditional model of monetary exchange. Digital currencies facilitate instantaneous peer-to-peer transfers in a way that was previously impossible. New currencies that transcend national borders could redefine how payments and user data interact. They could affect the nature of currency competition, the architecture of the international monetary system and the role of government-issued money.

This paper by the BIS discusses the key questions and economic implications of digital currencies. It discusses how digital currencies could unbundle the traditional roles of money, lead to digital currency areas that cover multiple countries, and move payments away from banks’ credit provision towards digital platforms. These changes could influence the transmission of monetary policy and necessitate the introduction of central bank digital currencies (CBDCs).