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The Evolution of Money: Why Financial Institutions Should Start Paying Attention to CBDCs

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As the world has increasingly become more digital, so too has our money — as evidenced by the rise of digital banking and mobile payments. According to a 2018 study, approximately one-third of American adults generally did not use cash to make payments while one in ten millennials made payments only using digital apps.[1] This trend has accelerated during the global pandemic as customers have favored digital and contactless transactions over physical cash, with one study showing that cash use declined by 40%. Further, 90% of respondents indicated that they will reduce their use of cash going forward.[2]

The private sector has responded with the rise of mobile payment platforms, larger companies creating their own digital currencies, and the growth of “stablecoins” (i.e., fiat-pegged digital currencies). Central banks have also started to take notice by developing their own “central bank digital currencies” (CBDCs), which are digital forms of fiat currency.

According to PwC’s CBDC Global Index, more than 60 central banks are at different stages of research and development of CBDCs. Some countries such as the US and UK are conducting research but have not announced an intention to begin CBDC development, while others - including China and Sweden - have launched live pilot programs.[3] Motivations cited by central banks for pursuing CBDCs include maintaining control over monetary policy, financial inclusion,[4] traceability of transactions for anti-money laundering (AML) and tax purposes, and improved cross-border payments.[5] Critics have been quick to note that CBDCs could pose data security and privacy concerns as well as reduce deposits at banks, which could reduce liquidity in the financial system.[6]

While it will likely take years to launch a digital dollar if the US decides to pursue its development, there are steps that financial institutions can take now to prepare themselves for potential domestic and global shifts toward CBDCs. This Regulatory brief provides our perspective on how CBDCs could impact the  business models of financial institutions as well as how existing custody, blockchain, cybersecurity and other functions can be adapted to support CBDCs.


[1] See Pew Research Center’s More Americans are making no weekly purchases with cash (December 2018).

[2] See the European Central Bank’s Study on the payment attitudes of consumers in the euro area (December 2020).

[3] For more information, see PwC’s CBDC Global Index (April 2021).

[4] Certain central banks pursuing CBDC projects including the Bahamas and Cambodia have cited that digital currencies could improve access to the financial system for many citizens that do not have access to bank accounts but use mobile phones. Further, countries with high rural populations or other limitations that reduce access to physical bank branches or ATMs could see financial inclusion benefits from CBDCs.

[5] For more information, see the Bank of International Settlements’ Central bank digital currencies: foundational principles and core features (October 2020).

[6] For more information, see the Bank Policy Institute’s Central Bank Digital Currencies: Costs, Benefits and Major Implications for the U.S. Economic System (April 2021). 

Regulatory brief

A publication of PwC's financial services regulatory practice


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Julien Courbe

Financial Services Leader, PwC US

Dan Ryan

Partner, PwC US

Adam Gilbert

Financial Services Advisory Regulatory Leader, PwC US

Roberto Rodriguez

Director of Regulatory Strategy, PwC US

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