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

Cyril Monnet, Hyun Song Shin, Jon Frost, Leonardo Gambacorta, Raphael Auer and Tara Rice
Additional contact information
Cyril Monnet: Department of Economics, University of Bern, Bern, Switzerland
Tara Rice: Bank for International Settlements, Basel, Switzerland

Annual Review of Economics, 2022, vol. 14, issue 1, 697-721

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.

Keywords: money; digital currencies; central banks; central bank digital currencies; CBDC; stablecoins; cryptocurrencies; distributed ledgers; big tech; data privacy (search for similar items in EconPapers)
JEL-codes: C72 C73 D4 E42 E58 G21 L86 O32 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (28)

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https://doi.org/10.1146/annurev-economics-051420-020324
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DOI: 10.1146/annurev-economics-051420-020324

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