Currency substitution in a world of looming retail CBDCs: Suggestive currency substitution-based evidence

Hongyi Chen and Pierre L. Siklos

Journal of International Financial Markets, Institutions and Money, 2023, vol. 88, issue C

Abstract: Digitalization, spurred by the pandemic, has accelerated plans by many central banks to introduce retail digital currencies (rCBDCs). If international coordination eventually allows individuals to hold digital multiple currencies this potentially implies greater scope for currency substitution. The potential to ease constraints on currency substitution dovetails nicely with the G20′s continuing aspiration to enhance digitalization as a “tool” to improve economic performance and reduce inequality. Nevertheless, as discussed in our study, opportunities for individuals and small businesses to exploit the promise of lower transactions costs thanks to digitalization will be difficult to realize in the current regulatory and geopolitical environment.

JEL-codes: E41 E42 E58 E61 F33 F36 F62 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:88:y:2023:i:c:s1042443123000963

DOI: 10.1016/j.intfin.2023.101828

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