Central bank digital currency and the impact on insurance

The paper analyzes the significance of central bank digital currencies in the realm of insurance policy, exploring key issues and dilemmas that may emerge in both theoretical and practical contexts. In this regard, the authors emphasize the necessity for adequate normative regulation of digital (public money) issues in a consistent and optimal manner. Central bank digital currency (CBDC) is viewed as a digital version of a country’s fiat money which is a liability of the central bank. On the other hand, cryptocurrencies are digital currencies that operate on decentralized blockchain technology and are usually issued by private entities. Central bank digital currencies are highly regulated, with the central bank overseeing their usage, transaction methods, and in some cases even who can access them. The paper highlights the potential use of digital currencies in the insurance industry, aiming to identify key concerns and challenges whose early recognition is a conditio sine qua non of overall financial stability and protection of values and standards of sound business practices.