Digital franc - Our money of the future

Topic

As in various areas of life, digitalization has also made its way into the world of money. Through the establishment of blockchain technology, the concept of central bank digital currency has become more and more present in the past years. The study examines the advantages and disadvantages of digital currencies in general and how these look in the context of Switzerland. In addition, the impact on private households, companies, financial intermediaries and the central bank is described. As a result, the study is intended to give individual stakeholders an insight into a potential future development.

Results

The study has shown that the digital central bank currency entails a number of advantages and disadvantages, both in a general sense and in the specific context of Switzerland. It is particularly interesting that these advantages and disadvantages are often related to the design. Anonymity is one example. For example, the tokenized delivery of CBDC can ensure anonymity. Although this anonymity has a positive impact on privacy, it also brings with it the risk of financial crime. Thus, if a account-based version that is transparent to third parties were to be created, financial crime could be minimized, but the privacy of citizens would suffer.

Implication

The establishment of a Central Bank Digital Currency (CBDC) in Switzerland has potential implications for practitioners, including:

1. Consideration of architecture: practitioners must be aware that individual designs minimize certain benefits and increase risks or vice versa. Therefore, it is of central importance to be aware of the design.
2. Discussion: practitioners must be aware that the user, i.e. the population, can have a potentially high influence on the success or failure of the implementation. Consequently, it is not only important to publicize the concept of CBDC, but also to highlight the potential benefits and drawbacks associated with potential introduction in Switzerland, thus creating a certain awareness among the population.
3. Ongoing analysis: Especially in a dynamic environment as we see it today, ongoing monitoring of current developments is of central importance. The advantages and disadvantages cannot be evaluated only once, but must be constantly re-evaluated.
4. Power shift: practitioners should be aware at all times that non-implementation can also entail risks. Specifically, practitioners must succeed in preventing or sufficiently regulating the establishment of private payment alternatives.

Method

In order to identify the advantages and disadvantages from the literature, the work applies the methodology of systematic literature analysis and uses the databases Swisscovery, JSTOR, Science Direct and Springer Verlag. After cleaning the obtained results , the study analyzed the individual articles and categorized the relevant advantages and disadvantages. These advantages and disadvantages were detailed in the paper individually. In a second step, the results were put into the context of Switzerland in order to answer the research question.