The charm of central bank digital currencies in a polarised world

95 percent of the world economy (measured by GDP) is exploring
the idea of launching a central bank digital currency (CBDC), and
many countries including Nigeria and China are entering into the
close-to-launch or fully launched phase. But what is the hype
about?

In this episode of the Sound of Economics, Maria Demertzis
invites Grégory Claeys and Josh Lipsky to discuss the purpose of
having a CBDC from both a retail and a wholesale perspective.
Particularly, they raise the geopolitical importance of CBDCs,
with the example of the G7’s financial sanctions against Russia
that ruled out several Russian banks from the SWIFT system and
froze Russian Foreign Exchange Reserves.

However, if CBDCs are largely implemented, whilst they could help
the EU achieve more autonomy in international finance, they could
also be used by countries to bypass western sanctions and
challenge the dollar hegemony in the current international
financial system.