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The Digital Leu Challenges and Possible Areas of Implementation

Author

Listed:
  • Claudiu Ioan Negrea

    (Romanian Academy, “Costin C. Kirițescu†National Institute of Economic Research, Bucharest, Romania)

  • Elena Madalina Scarlat

    (Romanian Academy, “Costin C. Kirițescu†National Institute of Economic Research, Bucharest, Romania)

Abstract

The potential implementation of the digital currency issued by central banks (CBDC) in the economy raises a number of challenges, including the idea of decentralization and the loss of the central bank's ability to effectively monitor the payments market and the fear that CBDC could exclude traditional payment solutions. Finding the balance in implementing CBDC-based payment solutions, integrating traditional payment ensuring that all stakeholders benefit from incentives so that they are interested in being involved in the process of distribution, use and processing of CBDC, while increasing financial inclusion and creating a competitive market for private sector payment solutions instruments is the new challenge for regulators. This paper addresses current limitations in implementing a CBDC-based payment solution, the potential risks of using CBDC, reducing the exclusion of traditional payment players and what this type of currency needs to ensure so that the implementation adopted by the users on a large scale.

Suggested Citation

  • Claudiu Ioan Negrea & Elena Madalina Scarlat, 2022. "The Digital Leu Challenges and Possible Areas of Implementation," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 377-385, September.
    • Handle: RePEc:ovi:oviste:v:xxii:y:2022:i:1:p:377-385
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    References listed on IDEAS

    as
    1. Itai Agur & Mario Bergara & Michael D. Bordo & Alessandra Cillo & Walter Engert & Santiago Fernandez de Lis & Ben S.C. Fung & Ernest Gnan & Andrew T. Levin & Dirk Niepelt & Ruth Judson & Donato Mascia, 2018. "Do We Need Central Bank Digital Currency? Economics, Technology and Institutions," SUERF Studies, SUERF - The European Money and Finance Forum, number 2018/2 edited by Ernest Gnan and Donato Masciandaro, May.
    2. Kumhof, Michael & Noone, Clare, 2018. "Central bank digital currencies - design principles and balance sheet implications," Bank of England working papers 725, Bank of England.
    3. Bindseil, Ulrich & Panetta, Fabio & Terol, Ignacio, 2021. "Central Bank Digital Currency: functional scope, pricing and controls," Occasional Paper Series 286, European Central Bank.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    digital currency issued by central banks (CBDC); settlement; clearing system; risks; financial stability;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • 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
    • E71 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy

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