Central Bank Digital Currencies and The Emerging Markets: The Currency Substitution Challenge

Sebastian Edwards

No 29489, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper, I discuss the implications for emerging countries of the adoption of central bank digital currencies (CBDCs) in advanced jurisdictions, such as the United States, the United Kingdom, and the Euro Zone. The analysis identifies benefits as well as costs. Among the former, one of the most important is lower costs for migrants’ remittances. Some of the costs of global CBDCs are associated with currency substitution, sudden currency depreciations, and lower seigniorage. At the global level, a smooth rollout of CBDCs in center countries requires international coordination. In addition, emerging countries will benefit from the implementation of stronger macroprudential regulations

JEL-codes: E31 E41 E58 F31 F36 (search for similar items in EconPapers)
Date: 2021-11
New Economics Papers: this item is included in nep-ban, nep-cba, nep-ifn, nep-mac, nep-mon and nep-pay
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Published as Sebastian Edwards, 2021. "Central Bank Digital Currencies and the Emerging Markets: The Currency Substitution Challenge," Challenge, vol 64(5-6), pages 413-424.

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