How Central Banks Think About Digital Currency
In the late 1600s, the introduction of bank notes changed the financial system forever. Fast forward to today, and another monumental change is expected to occur through central bank digital currencies (CBDC).
A CBDC adopts certain characteristics of everyday paper or coin currencies and cryptocurrency. It is expected to provide central banks and the monetary systems they govern a step towards modernizing.
But what exactly are CBDCs and how do they differ from money we use today?
The ABCs of CBDCs
To better understand a CBDC, it helps to first understand the taxonomy of money and its overlapping properties.
For example, the properties of cash are that it’s accessible, physical and digital, central bank issued, and token-based. Here’s how the taxonomy of money breaks down:
- Accessibility: The accessibility of money is a big factor in determining its place within the taxonomy of money. For instance, cash and general purpose CBDCs are considered widely accessible.
- Form: Is the money physical or digital? The form of money determines distribution and the potential for dilution, and future CBDCs issued will be completely digital.
- Issuer: Where does the money come from? CBDCs are to be issued by the central bank and backed by their respective governments, which differs from cryptocurrencies which mostly have no government affiliations.
- Technology: How does the currency work? CBDCs break down into token-based and account-based approaches. A token-based CBDC operates like banknotes today, where your information is not known nor needed by a cashier when accepting your payment. An account-based system, however, requires authorization to partake on the network, akin to paying with a digital wallet or card.
Digital Currency vs Digital Coins
In essence, digital currency is the electronic form of banknotes that exists today. Therefore, it’s viewed by some as a modern and efficient version of the cash you hold in your wallet or purse.
On the other hand, cryptocurrencies like Bitcoin are a store of value like gold that is secured by encryption. Cryptocurrencies are privately owned and fueled by blockchain technology, compared to digital currencies which do not use decentralized ledgers or blockchain technology.
Digital Currency: Regulatory Authority and Stability
Digital currencies are issued by a central bank, and therefore, are backed by the full power of a government. According to the Bank for International Settlements, over 20% of central banks surveyed say they have legal authority in issuing a CBDC. Almost 10% more said laws are currently being changed to allow for it.
As more central banks issue digital currencies, there’s likely to be favorability between them. This is similar to how a few currencies like the U.S. dollar and Euro dominate the currency landscape.
The Benefits of Issuing a CBDC
There are several positives regarding the issuance of a CBDC over other currencies.
First, the cost of retail payments in the U.S. is estimated to be between 0.5% and 0.9% of the country’s $20 trillion in GDP. Digital currencies can flow much more effectively between parties, helping reduce these transaction fees.
Second, large chunks of the global population are still considered unbanked. In this case, a CBDC opens avenues for people to access the global financial system without a bank. Even today, 6% of Americans do not have a single bank account.
Other motivations for a CBDC include:
- Financial stability
- Monetary policy implementation
- Increased safety, efficiency, and robustness
- Limit on illicit activity
An example of payments efficiency can be seen during the onset of the COVID-19 pandemic, when some Americans failed to receive their stimulus check. Altogether, some $2 billion in funds have gone unclaimed. A functioning rollout of a CBDC and a more direct relationship with citizens would minimize such a problem.
Status of CBDCs
Although widespread adoption of CBDCs is still far away, research and experiments are making notable strides forward:
- 81 countries representing 90% of global GDP are exploring CBDCs.
- The share of central banks actively engaging in CBDC work grew to 86% in the last 4 years.
- 60% of central banks are conducting experiments on CBDCs (up from 42% in 2019) and 14% are moving forward to development and pilot arrangement.
- The Bahamas is one of five countries currently working with a CBDC – the Bahamian Sand Dollar.
- Sweden and Uruguay have shown interest in a digital currency. Sweden began testing an “e-krona” in 2020, and Uruguay announced tests to issue digital Uruguayan pesos as far back as 2017.
- The People’s Bank of China has been running CBDC tests since April 2020. In all, tens of thousands of citizens have participated, spending 2 billion yuan, and the country is poised to be the first to fully launch a CBDC.
The U.K. central bank is less optimistic about a rolling out a CBDC in the near future. The proposed digital currency—dubbed “Britcoin”—is unlikely to arrive until at least 2025.
Disrupting The World of Money
Wherever you look, technology is disrupting finance and upending the status quo.
This can be seen through the rising market value of fintech firms, which in some cases are trumping traditional financial institutions in value. It is also evident in the rapid rise of Bitcoin to a $1 trillion market cap, making it the fastest asset to do so.
With the rollout of central bank digital currencies on the horizon, the next disruption of financial systems is already beginning.
The Richest Women in America in One Graphic
Only 12% of billionaires in the U.S. are women. Who is part of this prestigious group of the richest women in America?
The Richest Women in America in One Graphic
The majority of the world’s billionaires hail from the United States.
But of the 724 American billionaires whose net worths are tracked daily by Forbes, only 86 are women. That’s just 12% of the country’s billionaires.
This visualization examines the select few who have made the cut into this prestigious list, using data compiled from Forbes’ real-time billionaires list.
Note: All data is as of November 1, 2021 unless otherwise stated.
Top 10 Richest Women in America
Since 2020, MacKenzie Scott has donated over $8.5 billion and counting of her wealth. Yet, she still remains one of the richest women in the world. This is largely due to the Amazon shares that she received in her divorce settlement.
Amazon’s stock performance soared amid the pandemic, which resulted in the initial value of her shares ($38.3 billion) nearly doubling.
|Top 10 overall||Name||Net Worth||Age||Source of wealth|
|#1||Alice Walton||$68.1 B||72||Walmart|
|#2||MacKenzie Scott||$56.1 B||51||Amazon|
|#3||Julia Koch & family||$52.2 B||59||Koch Industries|
|#4||Jacqueline Mars||$31.5 B||82||Candy, pet food|
|#5||Miriam Adelson||$29.2 B||76||Casinos|
|#6||Abigail Johnson||$26.2 B||59||Money management|
|#7||Laurene Powell Jobs & family||$16.7 B||57||Apple, Disney|
|#8||Diane Hendricks||$11.7 B||74||Roofing|
|#9||Ann Walton Kroenke||$9.3 B||72||Walmart|
|#10||Blair Parry-Okeden||$8.8 B||71||Media, automotive|
Miriam Adelson inherited her late husband’s 57% stake (worth ~$19 billion) in Las Vegas Sands, making her one of the richest newcomers to the Forbes list. The casinos have locations across Las Vegas, Singapore, and Macao.
Several of the women in this top 10 list also share membership with some of the richest families in America—from the Walmart Waltons, to the Johnsons at the helm of Fidelity Investments and Fidelity International.
The Oldest Richest Women in America
The oldest female billionaire in the world, Alice Schwartz, is 95 years old. She co-founded Bio-Rad Laboratories with her husband, which operates in the life sciences research and clinical diagnostics markets. They started the company in 1952 with only $720 in the bank.
|Oldest||Name||Net Worth||Age||Source of wealth|
|#1||Alice Schwartz||$3.0 B||95||Biotech|
|#2||Wilma Tisch||$1.4 B||94||Diversified|
|#3||Doris Fisher||$2.8 B||90||Gap|
|#4||Johnelle Hunt||$4.7 B||89||Trucking|
|#5||Marian Ilitch||$4.4 B||88||Little Caesars|
|#6||Pauline MacMillan Keinath||$8.5 B||87||Cargill|
|#7||Margot Birmingham Perot||$4.2 B||87||Computer services, real estate|
|#8||Martha Ingram & family||$3.9 B||86||Book distribution, transportation|
|#9||Janice McNair||$4.2 B||85||Energy, sports|
|#10||Norma Lerner||$1.1 B||85||Banking|
After her husband’s passing in 2018, Janice McNair (aged 85) took over his 80% stake in the NFL team Houston Texans, which ranks highly as one of the world’s most valuable sports teams. This also subsequently catapulted her position as being among the wealthiest sports owners in the country.
The Youngest Richest Women in America
In the online dating era, Whitney Wolfe Herd has made a name for herself. The female-first dating app she co-founded, Bumble, grew into a formidable competitor for her former employer, Match Group (which owns Tinder and OkCupid, among others).
At age 31, Wolfe Herd became the youngest self-made female CEO in the country after Bumble’s $2.2 billion IPO in February 2021.
|Youngest||Name||Net Worth||Age||Source of wealth|
|#1||Whitney Wolfe Herd||$1.2 B||32||Dating app|
|#2||Rihanna||$1.7 B||33||Cosmetics, music|
|#3||Neha Narkhede||$1.4 B||37||Software|
|#4||Lynsi Snyder||$4.2 B||39||In-N-Out Burger|
|#5||Kim Kardashian West||$1.2 B||41||Cosmetics, reality TV|
|#6||Jane Lauder||$6.7 B||48||Estée Lauder|
|#7||Amy Wyss||$2.0 B||50||Medical equipment|
|#8||Sara Blakely||$1.2 B||50||Spanx|
|#9||MacKenzie Scott||$56.1 B||51||Amazon|
|#10||Aerin Lauder||$4.2 B||51||Cosmetics|
Wearing many hats from influencer to entrepreneur, socialite Kim Kardashian West’s cosmetics and fashion companies (KKW Beauty and shapewear line Skims) have catapulted her to a newfound billionaire status. She has a set of diverse revenue streams, from reality TV royalties to blue-chip and real estate investments.
Top 20 Self-Made Richest Women in America
The self-made label is an additional fascinating avenue to explore. Forbes defines this category as people who establish a fortune independently, rather than partly or wholly through inheritance.
One of the newest entrants into this mix is Rihanna. She already enjoyed significant success as an entertainer, with her claim to fame being one of the best-selling artists of the 2010s. However, it was her entrepreneurial spirit that put her on the Forbes list in August 2021. Rihanna owns 50% of her cosmetics company, Fenty Beauty. The other half is run by Bernard Arnault, who is among the world’s top billionaires.
Here is the rest of the top 20 self-made richest women in America:
|Self-Made||Name||Net Worth||Age||Source of wealth|
|#1||Diane Hendricks||$11.7 B||74||Roofing|
|#2||Judy Faulkner||$6.5 B||77||Health IT|
|#3||Meg Whitman||$6.3 B||65||eBay|
|#4||Judy Love||$5.2 B||84||Retail and gas stations|
|#5||Marian Ilitch||$4.4 B||88||Little Caesars|
|#6||Johnelle Hunt||$4.1 B||89||Trucking|
|#7||Thai Lee||$4.1 B||62||IT Provider|
|#8||Lynda Resnick||$4.0 B||78||Agriculture|
|#9||Gail Miller||$3.2 B||77||Car dealerships|
|#10||Doris Fisher||$2.8 B||90||Gap|
|#11||Alice Schwartz||$3.0 B||95||Biotech|
|#12||Oprah Winfrey||$2.7 B||67||Media|
|#13||Elaine Wynn||$2.2 B||79||Casinos, hotels|
|#14||Peggy Cherng||$2.0 B||73||Fast food (Panda Express)|
|#15||Sheryl Sandberg||$1.9 B||51|
|#16||Rihanna||$1.7 B||33||Cosmetics, music|
|#17||Jayshree Ullal||$1.7 B||60||Computer networking|
|#18||Safra Catz||$1.6 B||59||Software|
|#19||Jenny Just||$1.5 B||53||Fintech|
|#20||Eren Ozmen||$1.4 B||62||Aerospace|
Source: Forbes, as of Aug 2021 (latest available)
For those paying attention to the rapid rise of the fintech industry, Jenny Just’s entry on this list will come as no surprise. Her firm, Apex Fintech Solutions powers the trading technology behind companies like SoFi and eToro. In fact, she has started or bought 15 businesses in the space in just 24 years.
As the richest women in America continue to make great strides, this list could look very different in coming years.
Ranked: The Best and Worst Pension Plans, by Country
Which countries are best equipped to support their elderly citizens? This graphic compares pension plans around the world.
The Best and Worst Pension Plans Worldwide
Each year, millions of people around the world leave the workforce to retire.
But as the global population grows older, and the COVID-19 pandemic accelerates the already rising number of retirees, there is still a large degree of variance in the quality of public pension plans around the world.
Which countries have invested in robust public pension programs, and which lag behind?
This graphic, using 2021 data from Mercer CFA Institute Global Pension Index, compares retirement income systems worldwide.
How the Index Ranks Pension Plans
Because a country’s pension system is unique to its particular economic and historical context, it’s difficult to draw direct comparisons. However, there are certain elements that pension experts see as universally positive, and that lead to better financial support for older citizens.
As with previous rankings, Mercer and the CFA Institute organized these universal elements into three sub-indexes:
- Adequacy: The base-level of income, as well as the design of a region’s private pension system.
- Sustainability: The state pension age, the level of advanced funding from the government, and the level of government debt.
- Integrity: Regulations and governance put in place to protect plan members.
These three measures were used to rank the pension system of 43 different countries, representing more than 65% of the world’s population. This year’s iteration of the index notably includes four new countries—Iceland, Taiwan, UAE, and Uruguay.
The Full Ranking
When it comes to the best pension plans across the globe, Iceland, the Netherlands, and Denmark have the top three systems.
|🇭🇰 Hong Kong||61.8||55.1||51.1||87.7|
|🇳🇿 New Zealand||67.4||61.8||62.5||83.2|
|🇸🇦 Saudi Arabia||58.1||61.7||50.9||62.5|
|🇿🇦 South Africa||53.6||44.3||46.5||78.5|
Iceland’s system ranks high across all three sub-indexes. The country offers a state pension with two components: mandatory contributions from both employees and employers, and optional contributions to state-approved pension products.
Its system has a high contribution rate, which ultimately results in a generous state pension that retirees in Iceland can tap into. The country also has a relatively low gender pension gap, meaning the difference between the average female pension versus male pension is relatively small—especially compared to other OECD countries.
On the opposite end of the spectrum, the Philippines, Argentina, and Thailand scored the lowest on the ranking.
Thailand scores particularly low in the adequacy category, with a score of 35.2. To increase its score, Thailand could increase the minimum payments for its poorest demographic and include more employees in occupational pension schemes.
Recommendations for Better Pension Plans
According to the index, countries seem to be steadily improving their pension systems. From 2020 to 2021, the average score of the overall index increased by 1.0.
With an average of 60.7, the index shows that most countries’ systems have some good features, but they also have some significant shortcomings that could be addressed by the following recommendations:
- Boosting adequacy by increasing coverage, and including more employees in private pensions systems.
- Increasing sustainability by adjusting retirement pension age to reflect increasing life expectancy, and promoting higher workforce participation from older citizens.
- Raise integrity by introducing policies that reduce the gender pension gap and discrepancies amongst minorities.
Countries that implement even a few of these changes could make a huge difference for their next generation of retirees—and those that don’t could be in trouble in the near future.
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