Digitalization, retail payments and Central Bank Digital Currency

Abstract

Facing the challenges and leveraging the opportunities from digitalization may require changes to the traditional business model of central banks. This paper focuses on retail payments, where changes are being rapid and highly demanded by customers worldwide. Considering competition and financial stability arguments, it provides a rationale for central banks to have a deeper involvement in retail payment systems by building and keeping control of core components of these systems. Central Bank Digital Currency and Fast Payment Systems are assessed as alternative tools serving central banks to foster efficiency, resilience and security in retail payments, as well as to preserve financial stability.