Eswar Prasad new book on the future of money covers all the plans, dreams and fears of central bankers. We have been facing a couple of really hunting dilemmas since 1996. The disruption of the traditional ways of creating money was really kick started by the launching of the Internet. Our dilemmas were even sharpened and deepened since 2021, when a new global financial system /actually two, a western and an eastern one/ started to emerge.
Out of the main dilemmas of course the future of “CBDCs” is at the very heart of all our thinking. We all – central bankers, bankers, law makers, governments, fintech companies, cryptocurrency players and costumers – seek for the right mixture of decentralization of making money and the security of the privately managed payment systems.
This is exactly what CBDCs can offer through building up a backstop to all privately managed transactions. Having launched CBDCs we can further strengthen financial inclusion, we can improve monetary policy transmission, we can secure cross-border payments and we can even fight tax-evasion or corruption. We do not need to bypass banks, just on the contrary, this would be a 3.0 financial system of central banks, traditional banks/financial institutions and all the members of the new disruptive financial world.
All in all, the money of the future coincides with the future of money. The outcome will be the fusion of freedom and security in our financial systems.
Governor Matolcsy, MNB, the Central Bank of Hungary
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