Can there be a run on a bank if there are CBDCs? According to an economist at the Central Bank of Brazil, the answer is a bit complicated.
Through Real Digital, the central bank says it wants to enable so-called smart payments within a regulated environment. Smart payments include smart contracts, transactions with Internet of Things devices and even decentralized finance applications.
In the paper, Araujo highlights that the central bank must maintain a partnership with the private sector in providing liquidity to the market. According to Araujo, the central bank envisions the coexistence between the Real Digital and private money issued by institutions regulated by the CBB in the intended smart payments.
However, unlike the cryptocurrency ecosystem in which users own their assets and no one can lock their operations, there will be a system to lock withdrawals in Brazil's CBDC.
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