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Circular Economy and Central Bank Digital Currency

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  • Peterson K. Ozili

    (Central Bank of Nigeria)

Abstract

The emergence of central bank digital currency (CBDC) provides an opportunity for central banks to make an important contribution to the transition to a circular economy. This paper examines the role of a central bank digital currency in the circular economy. Central banks can contribute to the transition to a circular economy in two ways: first, by making central bank digital currency accessible to circular businesses and other players in the circular economy sector, and second, by looking into how the design features of CBDC can support circular economy goals. On the role of CBDC in the circular economy, I argue that a central bank digital currency offers a better payment option for circular economy financial transactions; central bank digital currency can lead to greater financial inclusion for ‘unbanked’ informal workers in the circular economy; CBDC can create a gateway that allows a central bank to offer financial assistance to distressed circular businesses; using a central bank digital currency can reduce illicit activities in the circular economy; a central bank digital currency can be used to provide stimulus funding to support circular businesses during crises; and, a central bank digital currency can offer low transaction cost for circular economy financial transactions. The paper also shows the link between CBDC and the circular economy. It also offers a critical perspective on the link between CBDC and the circular economy.

Suggested Citation

  • Peterson K. Ozili, 2022. "Circular Economy and Central Bank Digital Currency," Circular Economy and Sustainability, Springer, vol. 2(4), pages 1501-1516, December.
    • Handle: RePEc:spr:circec:v:2:y:2022:i:4:d:10.1007_s43615-022-00170-0
    DOI: 10.1007/s43615-022-00170-0
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Didier, Raphaël & Lagoarde-Ségot, Thomas, 2024. "Ecological money and finance.Introducing sustainable monetary diversity," International Review of Financial Analysis, Elsevier, vol. 95(PB).
    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. Ozili, Peterson K, 2023. "Central bank digital currency, poverty reduction and the United Nations sustainable development goals," MPRA Paper 117000, University Library of Munich, Germany.
    4. Arno J. van Niekerk, 2024. "Economic Inclusion: Green Finance and the SDGs," Sustainability, MDPI, vol. 16(3), pages 1-21, January.
    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. Larisa V. Sannikova, 2023. "Legal Framework for Central Bank Digital Currencies and the Digital Ruble," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 5, pages 27-44, October.
    7. Náñez Alonso, Sergio Luis & Echarte Fernández, Miguel Ángel & Kolegowicz, Konrad & Sanz-Bas, David & Jorge-Vázquez, Javier, 2023. "¿Qué impulsa la adopción de CBDC o bitcoin? Evidencia derivada de la experiencia del Caribe, Centroamérica y Sudamérica," Ensayos de Economía 21224, Universidad Nacional de Colombia Sede Medellín.
    8. Kucher, Lesia & Kucher, Anatolii & Morozova, Hanna & Pashchenko, Yulia, 2022. "Development of circular agricultural economy: potential sources of financing innovative projects," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 8(2), June.
    9. 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.
    10. Lagoarde-Ségot, Thomas & Revelli, Christophe, 2023. "Ecological money and finance. Introducing ecological risk-free assets," International Review of Financial Analysis, Elsevier, vol. 90(C).

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    More about this item

    Keywords

    Circular economy; Central bank digital currency; Circular finance; Linear economy; Resources; Sustainability; Central bank; CBDC design; Blockchain; Sustainable development; Payment system; Innovation;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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