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Cryptocurrencies and CBDC: The Route Ahead

Author

Listed:
  • Marion Laboure
  • Markus H.‐P. Müller
  • Gerit Heinz
  • Sagar Singh
  • Stefan Köhling

Abstract

This paper aims to provide an outline of the dynamic landscape of cryptocurrencies and central bank digital currencies (CBDC) so as to comment about the role and prospect of both in the future. We highlight the main drivers of the ongoing digital currency wave from a socio‐economic as well as historical perspective. From an investment standpoint, we evaluate the merits of placing a cryptocurrency within a diversified portfolio and analyse other factors to be taken into account when it comes to asset allocation considerations. We also explore environmental, social, and governance (ESG) implications of the introduction of such digital currencies. Finally, we comment on the current status of national CBDC projects and what it would mean for the digital currency universe when the official CBDC roll‐outs begin in a few years.

Suggested Citation

  • Marion Laboure & Markus H.‐P. Müller & Gerit Heinz & Sagar Singh & Stefan Köhling, 2021. "Cryptocurrencies and CBDC: The Route Ahead," Global Policy, London School of Economics and Political Science, vol. 12(5), pages 663-676, November.
    • Handle: RePEc:bla:glopol:v:12:y:2021:i:5:p:663-676
    DOI: 10.1111/1758-5899.13017
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    References listed on IDEAS

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    1. Codruta Boar & Andreas Wehrli, 2021. "Ready, steady, go? - Results of the third BIS survey on central bank digital currency," BIS Papers, Bank for International Settlements, number 114, October –.
    2. Alessandra Tanda & Cristiana-Maria Schena, 2019. "FinTech, BigTech and Banks," Palgrave Macmillan Studies in Banking and Financial Institutions, Palgrave Macmillan, number 978-3-030-22426-4, February.
    3. Bernardo Nicoletti, 2017. "The Future of FinTech," Palgrave Studies in Financial Services Technology, Palgrave Macmillan, number 978-3-319-51415-4, June.
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    Cited by:

    1. Jabbar, Abdul & Geebren, Ahmed & Hussain, Zahid & Dani, Samir & Ul-Durar, Shajara, 2023. "Investigating individual privacy within CBDC: A privacy calculus perspective," Research in International Business and Finance, Elsevier, vol. 64(C).
    2. Ayadi, Ahmed & Ghabri, Yosra & Guesmi, Khaled, 2023. "Directional predictability from central bank digital currency to cryptocurrencies and stablecoins," Research in International Business and Finance, Elsevier, vol. 65(C).
    3. Dora Almeida & Andreia Dionísio & Paulo Ferreira & Isabel Vieira, 2023. "Impact of the COVID-19 Pandemic on Cryptocurrency Markets: A DCCA Analysis," FinTech, MDPI, vol. 2(2), pages 1-17, May.
    4. Wang, Yizhi & Wei, Yu & Lucey, Brian M. & Su, Yang, 2023. "Return spillover analysis across central bank digital currency attention and cryptocurrency markets," Research in International Business and Finance, Elsevier, vol. 64(C).
    5. Marcin Pietrzak, 2023. "What can monetary policy tell us about Bitcoin?," Annals of Finance, Springer, vol. 19(4), pages 545-559, December.
    6. Peterson K. Ozili, 2022. "Circular Economy and Central Bank Digital Currency," Circular Economy and Sustainability, Springer, vol. 2(4), pages 1501-1516, December.
    7. Wang, Yizhi & Lucey, Brian M. & Vigne, Samuel A. & Yarovaya, Larisa, 2022. "The Effects of Central Bank Digital Currencies News on Financial Markets," Technological Forecasting and Social Change, Elsevier, vol. 180(C).
    8. Li, Fangmin & Yang, Tianle & Du, Min & Huang, Miao, 2023. "The development fit index of digital currency electronic payment between China and the one belt one road countries," Research in International Business and Finance, Elsevier, vol. 64(C).
    9. Dunbar, Kwamie, 2023. "CBDC uncertainty: Financial market implications," International Review of Financial Analysis, Elsevier, vol. 87(C).
    10. Ozili, Peterson K, 2024. "Thinking Fast and Slow about Central Bank Digital Currencies," MPRA Paper 120774, University Library of Munich, Germany.
    11. Wang, Guizhou & Hausken, Kjell, 2024. "Hard money and fiat money in an inflationary world," Research in International Business and Finance, Elsevier, vol. 67(PB).

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