Central Bank Digital Currency Presents Regulatory Dilemma

Questions remain about how central bank digital currency (CBDC) would be treated from a regulatory standpoint, with its functional status as e-money butting up against the intention for it to serve as an alternative to physical cash.

As an increasing number of countries experiment with the idea of a digital payment instrument issued and backed by a central bank, experts and regulators continue to debate the issue of how such money should be considered by authorities.

Aleksi Grym, head of digitalisation at the Bank of Finland, described how despite CBDC closely resembling existing forms of e-money, it may need to be defined and regulated differently if it is to serve as a true replacement for traditional notes.

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