Central Bank Digital Currencies or CBDCs were once a topic only discussed at academic conferences and research papers. However, with the rising popularity of cryptocurrencies, many countries are now exploring the possibility of issuing their own digital currency. A CBDC is simply a digital version of a government-issued currency that is backed by the central bank. In this article, we will discuss the pros and cons of CBDCs.

Pros of CBDCs

1. Increased Financial Inclusion: CBDCs have the potential to increase financial inclusion by providing access to financial services to unbanked and underbanked populations. CBDCs can be issued and used through mobile devices, allowing access to the currency to people who don’t have traditional bank accounts.

2. Improved Payment Systems: CBDCs can offer faster and cheaper payment systems, as transactions are settled in real-time, using mobile devices or other digital platforms. This could also lead to a reduction in the use of cash, which can be costly for governments to print and distribute.

3. Reduced Transaction Fees: CBDCs could reduce fees associated with transferring money across borders, which are often expensive and slow. By using CBDCs, cross-border transactions can be completed faster and at a lower cost.

4. Control over the Money Supply: With CBDCs, central banks can have more control over the money supply, which could lead to more stable currencies. By having the ability to monitor and regulate the use of CBDCs, central banks can reduce the likelihood of inflation and financial instability.

Cons of CBDCs:

1. Privacy Concerns: CBDCs could potentially infringe on the privacy of its users. With all transactions recorded and traceable, governments could effectively monitor citizens’ finances, leading to a loss of privacy.

2. Cybersecurity Risks: Digital currencies are vulnerable to cyberattacks and hacks, which could result in a loss of funds for the users. Governments would need to invest heavily in cybersecurity measures to prevent any potential attacks.

3. Disruption of the Banking Sector: CBDCs could potentially disrupt the banking sector by reducing the need for traditional banks. If people can hold and use CBDCs without requiring a bank account, traditional banks could lose customers.

4. Social and Economic Impacts: There could be social and economic impacts associated with the introduction of CBDCs. For instance, if people who don’t traditionally have access to financial services begin using CBDCs, it could lead to the loss of jobs in the traditional finance industry.


Central Bank Digital Currencies have the potential to offer many benefits, including increased financial inclusion, better payment systems, and reduced transaction fees. However, they also come with risks that need to be addressed, such as cybersecurity threats and privacy concerns. Before a CBDC is introduced, policymakers must evaluate its potential impact on society and the economy.