Outside of the United States, central banks are seeing the benefits to digital currencies. This article from MIT Technology Review explores the reasons and impacts. How will these trends start translating to banks here? And how will that affect housing?

The market for digital currency is down, but it’s certainly not out. Even if private cryptocurrencies are falling in popularity, it appears likely we are headed toward an era of national digital currencies that are backed by central banks.

Central banks are the institutions that set monetary policy for a nation, manage inflation, and act as the “lender of last resort”—such as the Bank of England in the UK and the Federal Reserve in the US. In fact, no fewer than 15 such central banks around the world are taking the idea seriously, and many others are at least exploring it, according to a recent report from the International Monetary Fund (IMF).

There are two main reasons for the trend, according to the report. First, new forms of digital money are “shrinking the role of cash.” Besides that, some central banks are interested in using the technology to reach the hundreds of millions of people who do not have a bank account or access to modern financial services. Finally, most central banks see the potential to reduce costs by replacing physical banknotes with digital ones. (See the table below for the rationales that central banks have given for their interest in issuing digital currency.)

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