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Central bank digital currency research around the world: a review of literature

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  • Peterson K. Ozili

Abstract

Purpose - The purpose of this paper is to gain some insight into central bank digital currency research by reviewing the recent advances in central bank digital currency (CBDC) research in a way that would help researchers, policy makers and practitioners to take a closer look at CBDC. Design/methodology/approach - The paper uses a systematic literature review methodology. Findings - The review shows a general consensus that a CBDC is a liability of the central bank and it has cash-like attributes. The review also presents the motivation and benefits of issuing a CBDC such as the need to increase financial inclusion, the need to improve the conduct of monetary policy and to foster efficient digital payments. The review also shows that many central banks are researching the potential to issue CBDCs due to its many benefits. However, a number of studies have called for caution against over-optimism about the potential benefits of CBDC due to the limiting nature of CBDC design and its inability to meet multiple competing goals. Suggested areas for future research are identified such as the need to find the optimal CBDC design that meets all competing objectives, the need for empirical evidence on the effect of CBDC on the cost of credit and financial stability, and the need to find a balance between limiting the CBDC holdings of users and allowing users to hold as much CBDC as they want, and there is a need to undertake country-specific and regional case studies of CBDC design. Originality/value - This review paper offers new areas for further research in central bank digital currencies.

Suggested Citation

  • Peterson K. Ozili, 2022. "Central bank digital currency research around the world: a review of literature," Journal of Money Laundering Control, Emerald Group Publishing Limited, vol. 26(2), pages 215-226, January.
    • Handle: RePEc:eme:jmlcpp:jmlc-11-2021-0126
    DOI: 10.1108/JMLC-11-2021-0126
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    References listed on IDEAS

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    1. Jonathan Chiu & Mohammad Davoodalhosseini & Janet Hua Jiang & Yu Zhu, 2019. "Bank Market Power and Central Bank Digital Currency: Theory and Quantitative Assessment," Staff Working Papers 19-20, Bank of Canada.
    2. Armelius, Hanna & Claussen, Carl Andreas & Hull, Isaiah, 2021. "On the possibility of a cash-like CBDC," EconStor Preprints 231485, ZBW - Leibniz Information Centre for Economics.
    3. 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.
    4. Cukierman, Alex, 2019. "Welfare and Political Economy Aspects of a Central Bank Digital Currency," CEPR Discussion Papers 13728, C.E.P.R. Discussion Papers.
    5. David Andolfatto, 2021. "Assessing the Impact of Central Bank Digital Currency on Private Banks," The Economic Journal, Royal Economic Society, vol. 131(634), pages 525-540.
    6. Michael D. Bordo & Andrew T. Levin, 2017. "Central Bank Digital Currency and the Future of Monetary Policy," NBER Working Papers 23711, National Bureau of Economic Research, Inc.
    7. Davoodalhosseini, Seyed Mohammadreza, 2022. "Central bank digital currency and monetary policy," Journal of Economic Dynamics and Control, Elsevier, vol. 142(C).
    8. Raphael A. Auer & Giulio Cornelli & Jon Frost, 2020. "Rise of the Central Bank Digital Currencies: Drivers, Approaches and Technologies," CESifo Working Paper Series 8655, CESifo.
    9. Wouter Bossu & Mr. Masaru Itatani & Arthur D. P. Rossi, 2020. "Legal Aspects of Central Bank Digital Currency: Central Bank and Monetary Law Considerations," IMF Working Papers 2020/254, International Monetary Fund.
    10. Raphael Auer & Rainer Boehme, 2020. "The technology of retail central bank digital currency," BIS Quarterly Review, Bank for International Settlements, March.
    11. Sriram Darbha & Rakesh Arora, 2020. "Privacy in CBDC technology," Staff Analytical Notes 2020-9, Bank of Canada.
    12. Codruta Boar & Henry Holden & Amber Wadsworth, 2020. "Impending arrival - a sequel to the survey on central bank digital currency," BIS Papers, Bank for International Settlements, number 107.
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    Cited by:

    1. Umar, Muhammad & Shahzad, Fakhar & Iqbal, Amjad & Tong, Fanghua, 2024. "Does institutional quality matter for central bank digital currency adoption?," Economic Analysis and Policy, Elsevier, vol. 83(C), pages 378-389.
    2. Peterson K. Ozili, 2023. "Assessing global and local interest in eNaira CBDC and cryptocurrency information: implications for financial stability," Journal of Internet and Digital Economics, Emerald Group Publishing Limited, vol. 3(1/2), pages 1-17, March.
    3. Ngo, Vu Minh & Van Nguyen, Phuc & Nguyen, Huan Huu & Thi Tram, Huong Xuan & Hoang, Long Cuu, 2023. "Governance and monetary policy impacts on public acceptance of CBDC adoption," Research in International Business and Finance, Elsevier, vol. 64(C).
    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. Peterson K. Ozili, 2023. "Using Central Bank Digital Currency to Achieve the Sustainable Development Goals," Contemporary Studies in Economic and Financial Analysis, in: Digital Transformation, Strategic Resilience, Cyber Security and Risk Management, volume 111, pages 143-153, Emerald Group Publishing Limited.
    6. Alfar, Abdelrahman J.K. & Kumpamool, Chamaiporn & Nguyen, Dung T.K. & Ahmed, Rizwan, 2023. "The determinants of issuing central bank digital currencies," Research in International Business and Finance, Elsevier, vol. 64(C).
    7. İbrahim Aydın & Zübeyir Çelik & Kaan Yiğenoğlu & Ayhan Cesur, 2024. "Consumers' foresight for the digital Turkish lira: an empirical study," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 29(2), pages 214-228, June.
    8. Helmi, Mohamad Husam & Çatık, Abdurrahman Nazif & Akdeniz, Coşkun, 2023. "The impact of central bank digital currency news on the stock and cryptocurrency markets: Evidence from the TVP-VAR model," Research in International Business and Finance, Elsevier, vol. 65(C).
    9. Zhang, Runze & Li, Zhijun & Xiao, Chunqu & You, Jiwang, 2023. "New engines of economic growth: How digital currencies lead the way to growth in the era of digital economy," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1597-1617.
    10. Bhaskar, Ratikant & Hunjra, Ahmed Imran & Bansal, Shashank & Pandey, Dharen Kumar, 2022. "Central Bank Digital Currencies: Agendas for future research," Research in International Business and Finance, Elsevier, vol. 62(C).
    11. Santhoshi Gondesi & Kameswari Jada & Ramesh Palisetty & Veena Ishwarappa Bhavikatti & Omnamasivaya Boddeda & Chaitanya Gorli & Tejaswini Bastray & Sony Hiremath, 2024. "Digital currency: an empirical study analyzing its effectiveness in the banking sector," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 15(11), pages 5182-5195, November.
    12. Smirna Tudor Gherasim & Ifrim Mihaela & Topan Mihai Vladimir & Stamate-Ștefan Andreas, 2023. "Central Bank Digital Currencies Analyzed in a Banking School versus Currency School Framework," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 17(1), pages 638-648, July.

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    More about this item

    Keywords

    Digital currency; Money; Central bank; Central bank digital currency; CBDC; Digital finance; Cryptocurrency; Financial inclusion; CBDC design; Blockchain; Distributed ledger technology; E42; E44; E52; E58;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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