The promises and perils of central bank digital currencies

Promesses et périls des monnaies numériques de banque centrale

Louis Larue, Clément Fontan and Joakim Sandberg

Revue de la Régulation - Capitalisme, institutions, pouvoirs, 2020, vol. 28

Abstract: This paper analyzes the proposal that central banks should issue digital currencies (CBDC) to provide a public alternative to private digital accounts and cryptocurrencies. We build on some recent themes in political economy research to give a broader and more balanced perspective than the existing literature, highlighting both the promises and perils of CBDC. We argue that, on the one hand, the present state of the private financial sector is problematic and regulators should seek to tackle the issues of financial power, financial instability and lack of adequate monetary policy options. On the other hand, implementing CBDC comes with risks of its own, such as that of creating a “Frankenstein scenario” where too much power is given to unelected technocrats. Our tentative conclusion is therefore that CBDC should be seen as a second-best option, while the primary focus of policy makers should be on the possibility of financial re-regulation.

Keywords: central banks; central bank digital currencies (CBDC); financial ethics; helicopter money; banques centrales; monnaies numériques de banque centrale; éthique financière; hélicoptère monétaire; bancos centrales; monedas numéricas del banco central; ética financiera; helicóptero monetario (search for similar items in EconPapers)
JEL-codes: E52 E58 G21 G28 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:rvr:journl:2020:18018

DOI: 10.4000/regulation.18018

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