Digital Currency - White Paper

As digital currencies begin to play a critical role in the global economy, their responsible design and deployment must be a focus for decision-makers around the world

Globally, there is an accelerating shift towards digital payments and the ownership and use of digital currency. Innovations in technology are driving discussions and development of new forms of money with which the public can interact. The way global leaders – from public and private sectors – develop, coordinate and regulate such digital currencies will have profound implications on society’s capacity to harness their compelling benefits and avoid the potentially significant risks they introduce.

Two distinct forms of digital currency – central bank digital currency (CBDC) and “stablecoins” – have caught the attention of policy-makers and the private sector in recent years. CBDC and stablecoins are the focus of this series of white papers. More than 70% of central banks are currently exploring the design and issuance of CBDC for their economies, attracted by opportunities to improve – among other things – financial inclusion, digital trade, payment efficiency and access to safe central bank money in an era of dwindling cash usage.

China has launched large-scale pilots of its Digital Currency Electronic Payment (DC/EP), while smaller nations such as the Bahamas have started to launch their CBDC. Yet, successful CBDC deployment is easier said than done. CBDC can introduce considerable risks to its native economy and citizens, as well as to foreign jurisdictions to which it grants access.

Stablecoins – issued by private entities rather than monetary authorities – are a form of cryptocurrency operating on blockchain technology, with pricestabilization mechanisms that aim to keep their prices stable relative to a fiat currency or other assets. Stablecoins can offer the capabilities of cryptocurrency without the price volatility. However, some stablecoins have been rapidly issued and adopted, without always adhering to sufficient regulatory oversight or consumer protection practices.

The World Economic Forum’s Digital Currency Governance Consortium (DCGC) – comprising a global, multi-sector set of more than 85 leading organizations – has gathered since early 2020 to co-design research and policy frameworks to guide the private sector and policy-makers through some of the most pressing challenges, opportunities and decisions related to CBDC and stablecoins. It plays a critical role in leading multi-stakeholder discussions on these subjects in a neutral and objective manner, catalysing the cross-sector global cooperation that is essential to successfully address the opportunities and risks introduced by CBDC and stablecoins in the age of new digital money.