The digitalization of money

Summary

Continuous innovation and the gradual decline of the use of cash are giving way to a new digital monetary system. Central banks must define the new role they will play coming out of this transformation.

Key points

• Key points:
• The great milestone in the evolution of money occurred in the twentieth century with the emergence of electronic money, which cannot be considered cash per se, but it is backed by cash or deposits. And finally, the arrival of digital currencies based on blockchain technology.
• Bitcoin and other cryptocurrencies has been criticied by their high volatility; the associated operational risks and possible fraud or robbery; and the high electricity consumption.
• Stablecoins have emerged as a feasible alternative of Bitcoins and other cryptocurrencies.
• In this environment, central banks must define their new role they will play coming out of this transformation.

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