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Annual Review of Economics

Volume 14, 2022

Central Bank Digital Currencies: Motives, Economic Implications, and the Research Frontier

Abstract

In just a few years, central banks have rapidly ramped up their research and development efforts on central bank digital currencies (CBDCs). A growing body of economic research informs these activities, often focusing on the “reserves for all” aspect of CBDCs for retail use. However, CBDCs should be considered in the full context of the digital economy and the centrality of data, which raises concerns around competition, payment system integrity, and privacy. This review gives a guided tour of the growing CBDC literature on the microeconomic considerations related to operation architectures, technologies, and privacy as well as the macroeconomic implications for the financial system, financial stability, and monetary policy. A set of questions, particularly on the cross-border dimensions of CBDCs, remains unresolved and calls for further work to expand the research frontier.

Keyword(s): big tech, CBDC, central bank digital currencies, central banks, cryptocurrencies, data privacy, digital currencies, distributed ledgers, JEL C72, JEL C73, JEL D4, JEL E42, JEL E58, JEL G21, JEL L86, JEL O32, money, stablecoins
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/content/journals/10.1146/annurev-economics-051420-020324
2022-08-12
2024-04-23
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/content/journals/10.1146/annurev-economics-051420-020324
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Central Bank Digital Currencies: Motives, Economic Implications, and the Research Frontier
Annual Review of Economics 14, 697 (2022); https://doi.org/10.1146/annurev-economics-051420-020324
/content/journals/10.1146/annurev-economics-051420-020324
/content/journals/10.1146/annurev-economics-051420-020324
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