CBDC likely to pose risks for financial stability, says World Bank

CBDC differs from traditional central bank money in that it can be digitally created and recorded on centralised or decentralised ledgers

The World Bank has said that introduction of the Central Bank Digital Currency (CBDC) could potentially pose risks to privacy, increase responsibilities of the central bank, and may also lead to currency substitution through cross-border transactions.

“The introduction of CBDC could disrupt the existing financial-intermediation structure. In addition, depending on design and country context, CBDC could pose risks to financial stability, financial integrity, data protection and privacy, and cyber resilience. Further, it can have implications for the legal and regulatory framework, increased responsibilities of the central bank, and could also lead potentially to currency substitution, especially in the context of cross-border