Abstract

Money was a centre of economic gravity from its incepƟ on. It evolved from gold to fi at currency, and now we face a new era of monetary evoluƟ on. Every step of development gives him new power to infl uence society by reaching more and more aspects of social life. With its infl uence were unknown risks and concerns to-ward monetary systems fl exibility and sustainability.Using a promise to pay as money (banknote) has several criƟ cal legal and technical inconsistencies with the token-based CBDC system. One signifi cant limitaƟ on is that promissory notes may not have a unique serial num-ber like physical currency printed by central banks. In the modern hybrid monetary system where only cash has a unique serial number and banks’ electronic payments work on an account-based approach, the incompaƟ bility of promise to pay with real money is not visible widely. Overall, the role of fracƟ onal reserve banking and the money mulƟ plier in a token-based CBDC system will play a diff erent role than in tradiƟ onal banking systems, given the unique characterisƟ cs of digital tokens and the role of central banks in issuing and controlling them. By analysing these key aspects, this paper aims to provide a comprehensive understanding of the potenƟ al eff ects of CBDCs on fracƟ onal reserve banking. The fi ndings of this research will contribute to the ongoing discus-sions and debates surrounding the adopƟ on and implementaƟ on of CBDCs, enabling policymakers, regulators, and banking insƟ tuƟ ons to make informed decisions in this challenging era of digital currencies.

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