Tan Kin Lian - Perspectives Central Bank Digital Currency (CBDC)
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The introduction of a central bank digital currency (CBDC) serves several purposes, many of which complement or enhance existing functions provided by commercial banks:

Financial Inclusion: CBDCs can provide access to financial services for those who are unbanked or underbanked, offering a government-backed digital payment system accessible to all, regardless of their relationship with commercial banks.

Payment System Efficiency: CBDCs can streamline payment systems, potentially reducing transaction costs and settlement times, benefiting individuals, businesses, and the economy at large.

Monetary Policy Tools: Central banks can use CBDCs as a tool for implementing monetary policy more effectively. For instance, they might use CBDCs to adjust interest rates directly, influence spending patterns, or monitor economic activity more closely.

Reducing Dependence on Cash: Governments might aim to reduce the reliance on physical cash, which can be costly to produce and manage, by offering a digital alternative.

Financial Stability: CBDCs might enhance financial stability by providing a safer alternative to private cryptocurrencies, reducing the risks associated with unregulated digital currencies.

While commercial banks already provide similar functions, CBDCs offer a government-backed, sovereign form of digital currency. This allows for more direct control by the central bank over the monetary system, ensures compliance with regulations, and might provide a more stable and reliable alternative to privately issued digital currencies.

Tan Kin Lian 

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