Together with our partners at OMFIF, we have written a report on the development of central bank digital currencies (CBDCs) and the implications for the gold market. CBDCs can potentially enable a wide range of new features. Money can become programmable, allowing policymakers to incentivise certain spending behaviours that can optimise economic impact or address social concerns. The trackable nature of CBDCs can also help to deter financial crimes. The ability to easily deploy “helicopter money” may also spark concerns about inflation.
These changes may fundamentally alter the relationship between individuals and money, which may in turn influence the usage of gold as a financial asset. This report will examine 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.