At the dawn of a new age

VIII. Effects of central bank digital currency on payments László Kajdi–Lóránt Varga In our study we first examine the objectives and future development scenarios for which the introduction of central bank digital currency (CBDC) may be theoretically justified from a payments perspective; second, given the current situation of Hungarian retail and corporate payments, we review which of these objectives may also be relevant to these actors; and third, we explain the effects that the various possible operating models would have on the payments market if CBDC were to be introduced.

With almost all international CBDC research and projects currently underway, payment objectives of some sort have been formulated, but these are very diverse: they can be linked to reducing the use of cash or to preserving the role of generally available central bank money in payments, enhancing financial inclusion, increasing the development and security of electronic payments, reducing payment service charges, or, as the case may be, addressing the challenges posed by FinTech and BigTech operators.

Although, theoretically, several of the above objectives could be relevant in Hungary based on the characteristics of domestic payments, they can apparently be achieved more quickly or more efficiently by other means, such as the development of already available electronic payment solutions and payment services in the market. However, that situation may change at any time in the future. For example, if the increase in the proportion of electronic payments stalled, or BigTech operators carved out a more significant share of domestic payments in an uncontrollable manner, or the package-based, transaction fee-free pricing of retail electronic payment services failed to be taken up at an adequate rate, consideration should be given, inter alia, to the possibility of introducing CBDC as a means to address the situation at hand.

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