As more governments consider launching a central bank digital currency (CBDC), they face many important questions: Why create a digital dollar, euro, or rupee? What technology best fits that purpose? How might a CBDC affect competition in the market?
Policymakers also need to think about another vital question: How to engage the private sector to partner in the project?
Private enterprises will be critical to the success of CBDCs, especially ones intended for retail use, we show in a joint research paper with Amazon Web Services (AWS). They have the technological expertise to help design, build, and manage a new digital currency, whether in partnership with the central bank or on an outsourced basis. Private firms also have ongoing connection to businesses and consumers to deliver CBDC services effectively and innovate in response to market signals.