These technologies have also spawned volatile investment instruments such as crypto-assets and stablecoins whose existence may accelerate the thrust among central bankers towards retail CBDC issuance. The discussion on CBDCs raises several issues, including are they inevitable in the digital age and will they impact financial stability.
In forming this view, we weighed the risk that inflation could fall short of target against the risk that a lower interest rate path would lead to higher financial vulnerabilities, which could make it even more difficult to attain the inflation target further down the road. Clearly, this balance can change over time as the data evolve.