Wholesale financial markets and digital currencies: making headway in the tokenisation of central bank money

Abstract

The interest taken by central banks, and by society at large, in central bank digital currencies (CBDCs) has grown notably in recent years. Although the greatest efforts have focused on studying and experimenting on a new class of monetary liability with universal access (i.e. retail), a second variant, namely a wholesale or interbank CBDC, is gaining ground by leaps and bounds. Specifically, almost 20 monetary authorities are already actively exploring this field with the aim of determining whether or not wholesale CBDCs can enhance the efficiency, flexibility and security of the clearing and settlement process for payments and securities (including in cross-border transactions) and of the associated risk management procedures. These experiences, in turn, highlight the numerous practical and legal challenges that have yet to be resolved and illustrate a possible path for taking full advantage of them. This article analyses the characteristics of the initiatives that have made the most progress to date, placing particular emphasis on the most important lessons learnt.