Technological change has always been a driving force in the evolution of money. The barter system could only give way to commodity money because refining and standardisation built trust in precious metal coinage. Paper notes gained acceptability because improved printing technology reduced the risk of counterfeiting. Throughout the history of money, technological change has helped to reduce the core challenges of transacting: ease, reliability and trust.
The world is poised for the next step in the evolution of money. Private cryptocurrencies have emerged as potential new mediums of exchange, although their long-term viability is yet to be proven. Central banks have also seized on the possibilities brought about by our highly digitised world with the development of central bank digital currencies. Although several different models for CBDCs are being considered, they all represent a step forward in the relationship between central banks and the currencies they issue.
This report examines the potential paths which CBDCs might take and their impact on gold as well. While the possibilities that we explore are all speculative, this report can serve as a starting point for thinking about the wider impacts of CBDCs on our relationship with money. Money will continue to evolve with changing technology, but how these changes will impact how we spend, save and transact can only be understood over time.