In February 2021, an internal working group was formed to oversee and examine the worldwide trends regarding Central Bank Digital Currencies (CBDCs). Specific focus was on jurisdictions that share similar characteristics with the Czech Republic. Their main objectives were to analyze the rationale behind issuing a Czech CBDC and assess its potential impact on the central bank, the domestic financial sector, and the broader Czech economy.
The seven key payment system viewpoints and arguments were studied in detail.
1.) In the Czech Republic, the quantity of cash in circulation is growing yearly. Therefore, the declining use of cash trend is not relevant to the country.
2.) Cash performs the function of a fallback means of payment
3.) The existing payment infrastructure appears to be adequate for handling electronic payments. The Czech Republic boasts a reliable and efficient instant payment system, making it more sensible at present to focus on enhancing the current infrastructure rather than developing an entirely new system for a CBDC.
4.) The motive for introducing CBDC based on financial inclusion is not applicable since 80% of the population already has access to banking services, and the remaining portion has expressed no interest in acquiring them.
5.) The issue of utilizing CBDC for facilitating cross-border payments is not currently relevant, as it would require reactive development in conjunction with the establishment of a digital euro or US dollar.
6.) Considering the existing EU legislation pertaining to combatting money laundering and terrorist financing, the concept of introducing an anonymous CBDC in the Czech Republic is inconceivable.
7.) Fiscal transfers to the public during recessions, pandemics, natural disasters, etc., can be accomplished through existing bank accounts or by utilizing postal services.
As a result, it was concluded that there are presently no compelling reasons to issue a retail CBDC. However, due to the dynamic nature of this field, it is still appropriate to closely monitor central banks’ activities and their CBDC projects and to be prepared, if necessary, to give increased attention to considerations regarding a potential future issuance of CBDC in the Czech Republic
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