Future Challenges: CBDC and Greening Monetary Policy

The Central Bank Digital Currency will open up the possibility for anyone to hold central bank money in digital format. The introduction of a CBDC is motivated by the need to preserve the public nature of money, offsetting the decline in the use of cash and the proliferation of private digital payment tools. The version of CBDC generally preferred by central banks is the digital banknote: unremunerated and available in small amounts for retail payments. Albeit issued by the central bank, the CBDC will be distributed through the banking system in most countries. In this chapter, the issues related to the CBDC will be discussed in general, then some national initiatives will be reported: namely those currently taking place in China, the euro area, the UK, and the US. Central banks pay increasing attention to sustainability issues. The asset purchase programs implemented in recent years have increased the need to control their exposure to climate-related risks and to assess the impact of their investment policy on the environment. In this chapter, we will overview the initiatives taken by the Network for Greening the Financial System and discuss the sustainability policy of the ECB.