Central Bank Digital Currencies Adoption: Threat or Opportunity?
Keywords:
CBDCs, benefits, risks, financial system, digital finance
Abstract
The emergence of Central Bank Digital Currencies (CBDCs) represents a major shift in the global financial landscape. This study examines the dual nature of CBDCs within the global financial system as a potential threat and opportunity. This study aims to study the benefits and risks of adopting digital currencies for central banks and their possible effects on global financial systems. The results revealed that CBDCs can enhance payment systems, financial inclusion, and monetary policy effectiveness. However, they also pose financial stability, privacy, and cybersecurity risks.
This study concluded that CBDCs represent an important innovation in digital finance and offer significant advantages. Still, their successful integration requires careful consideration of various challenges and balancing benefits and risks to lay strong foundations to counter these risks and take advantage of CBDCs' potential to promote a more inclusive and efficient financial system
References
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- European Central Bank. (2023). Eurosystem proceeds to next phase of digital euro project. https://www.ecb.europa.eu/press/pr/date/2023/html/ecb.pr231018~111a014ae7.en.html (consulted on 09/01/2024).
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- Auer, R., Frost, J., Gambacorta, L., Monnet, C., Rice, T., & Shin, H. S. (2022). Central Bank Digital Currencies: Motives, Economic Implications, and the Research Frontier. Annual Review of Economics, 14, 697–721. https://doi.org/10.1146/annurev-economics-051420-020324
- Ballaschk, D., & Paulick, J. (2021). The public, the private and the secret: Thoughts on privacy in central bank digital currencies. Journal of Payments Strategy & Systems, 15(3), 277–286.
- Boar, C., & Wehrli, A. (2021). Ready, steady, go?-Results of the third BIS survey on central bank digital currency. BIS Papers, 114, 77–82.
- Cesaratto, S., & Febrero, E. (2023). Central Bank Digital Currencies: a proper reaction to private digital money? Review of Keynesian Economics, 11(4), 529–553. https://doi.org/10.4337/roke.2023.04.05
- Das, M. (2023). Implications of Central Bank Digital Currencies for Monetary Policy Transmission. Fintech Notes, 2023(010), 1. https://doi.org/10.5089/9798400252792.063
- Dionysopoulos, L., Marra, M., & Urquhart, A. (2024). Central bank digital currencies: A critical review. International Review of Financial Analysis, 91(March 2023), 103031. https://doi.org/10.1016/j.irfa.2023.103031
- ECB, & BIS. (2020). Central bank digital currencies: foundational principles and core features report no. 1 in a series of collaborations from a group of central banks. Bank of International Settlements, 1. https://www.bis.org/publ/othp33.pdf
- Fuje, H., Quayyum, S., & Ouattara, F. (2022). More African Central Banks Are Exploring Digital Currencies. IMFBLOG. June, 23.
- Gault, B. P. (2019). Missing Key: In Body as Landscape, Love as Intoxication. https://doi.org/10.2307/j.ctvpwhfs4.6
- Kovanen, A. (2019). Competing With Bitcoin - Some Policy Considerations for Issuing Digitalized Legal Tenders. International Journal of Financial Research, 10(4), 1. https://doi.org/10.5430/ijfr.v10n4p1
- Lannquist, A. (2023). Central Bank Digital Currency’s Role in Promoting Financial Inclusion. Fintech Notes, 2023(011), 1. https://doi.org/10.5089/9798400253331.063
- Loukoianova, E., Yang, Y., Guo, S., Hunter, L., Jahan, S., Jamaludin, F., & Schauer, J. (2018). Financial Inclusion in Asia-Pacific. Departmental Papers / Policy Papers, 18(17), 1. https://doi.org/10.5089/9781484371015.087
- Nabilou, H. (2020). Testing the waters of the Rubicon: the European Central Bank and central bank digital currencies. Journal of Banking Regulation, 21(4), 299–314. https://doi.org/10.1057/s41261-019-00112-1
- Ozturkcan, S., Senel, K., & Ozdinc, M. (2022). Framing the Central Bank Digital Currency (CBDC) revolution. Technology Analysis & Strategic Management, 1–18. https://doi.org/10.1080/09537325.2022.2099261
- Payments, F. O. F. (2023). FUTURE OF PAYMENTS 2023 CHARTING THE COURSE TO SEAMLESS GLOBAL PAYMENTS.
- Pelagidis, T., & Kostika, E. (2022). Investigating the role of central banks in the interconnection between financial markets and cryptoassets. Journal of Industrial and Business Economics, 49(3), 481–507. https://doi.org/10.1007/s40812-022-00227-z
- Rehman, M. A., Irfan, M., Naeem, M. A., Lucey, B. M., & Karim, S. (2023). Macro-financial implications of central bank digital currencies. Research in International Business and Finance, 64, 101892. https://doi.org/10.1016/j.ribaf.2023.101892
- Rina Bhattacharya, Dmitry Vasilyev, and M. V. (2023). Interest in Central Bank Digital Currencies Picks Up in Latin America and the Caribbean While Crypto Use Varies. International Monetary Fund. https://www.imf.org/en/News/Articles/2023/06/22/cf-interest-in-cb-digital-currencies-picks-up-in-latam-the-caribbean-while-crypto-use-varies
- Sutton-lalani, A., & Hernandez, S. (2023). Redefining Financial Inclusion for a Digital Age : Implications for a Central Bank Digital Currency. https://doi.org/https://doi.org/10.34989/sdp-2023-22
- Temperini, J., D’Ippoliti, C., & Gobbi, L. (2024). Is the time ripe for helicopter money? Growth impact and financial stability risks of outright monetary transfers. Structural Change and Economic Dynamics, 69, 24–36. https://doi.org/10.1016/j.strueco.2023.11.003
- Zhang, X. (2020). Opportunities, challenges and promotion countermeasures of central bank digital currency. Proceedings - 2020 Management Science Informatization and Economic Innovation Development Conference, MSIEID 2020, 343–346. https://doi.org/10.1109/MSIEID52046.2020.00072
- Atlantic Council (2023), Central Bank Digital Currency Tracker, Geoeconomics Center, https://www.atlanticcouncil.org/cbdctracker/ (consulted on 07/01/2024).
- CBDC Tracker(2023), Today's Central Bank Digital Currencies Status, https://cbdctracker.org/ (consulted on 19/02/2024).
- European Central Bank. (2023). Eurosystem proceeds to next phase of digital euro project. https://www.ecb.europa.eu/press/pr/date/2023/html/ecb.pr231018~111a014ae7.en.html (consulted on 09/01/2024).
- IMF. (2023). The Digital Finance Voyage: A Case for Public Sector Involvement. IMF. https://www.imf.org/en/News/Articles/2023/11/15/sp-111423-the-digital-finance-voyage-a-case-for-public-sector-involvement (consulted on 29/11/2024).
- Karam, A. A. (2023). Central Bank Digital Currency (CBDC) and blockchain enable the future of payments. https://www.ibm.com/blog/central-bank-digital-currency-cbdc-and-blockchain-enable-the-future-of-payments/ (consulted on 03/12/2024).
Published
2024-06-01
How to Cite
KHATOUI, M. (2024). Central Bank Digital Currencies Adoption: Threat or Opportunity?. Journal of Excellence for Economics and Management Research, 8(1), 195-210. Retrieved from http://journals.lagh-univ.dz/index.php/jeemr/article/view/3845
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Original Article
