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Central Bank Digital Currencies: What They Are, What They Might Become, and What They Mean for Credit Unions

In the past several years, interest in central bank digital currencies (CBDCs) has taken off around the world. While most CBDCs are still in their infancy, there is growing recognition that CBDCs will play an important role in financial institutions digital transformation.

Executive Summary

Today, most CBDCs exist only as proposals, prototypes, or trials, and there is little consensus on questions around efficiency, surveillance, and financial inclusion. However, with countries around the world beginning to issue their own versions of CBDCs and the United States Federal Reserve publishing a long-anticipated report on CBDCs earlier this year, there is a growing recognition that CBDCs will have an important role to play in the digital landscape of the future. As central banks begin their journey in considering and implementing CBDCs, understanding the variety of forms CBDCs can take, as well as their associated risks and opportunities, becomes crucial for credit unions.

Credit Union Implications

The introduction of a CBDC presents both opportunities and challenges for credit unions. Even if a CBDC is never developed in the US, conducting table exercises by considering the questions they raise will support credit unions’ broader digital transformation journey. 

Many of the CBDC benefits that the Fed’s report lists dovetail with the mission of credit unions and serve to bolster credit unions’ role as essential intermediaries. Credit unions can use CBDCs to:

  • Safely meet future needs and demands for payment services
  • Improve cross-border payments
  • Promote financial inclusion

Download this report to help you strategize around the opportunities and challenges that CBDCs present for credit unions.

Filene’s Center for Emerging Technology is generously funded by:

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