Central bank digital currency: The new kid on the block?

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The emergence of cryptocurrencies and stablecoins has prompted many central banks to study the issuance of digital central bank money. This raises the question of whether central banks should also use Blockchain technology. A notable challenge here is the scalability of Blockchain technology. Another challenge arises from the need to strike the right balance between know-your-customer requirements and privacy protection. Both problems are easier to solve without Blockchain. Blockchain, however, needs a means of payment. This paper therefore argues that central bank digital currency (CBDC) does not need Blockchain, but that Blockchain needs CBDC.