Central bank digital currencies and the international payment system: The demise of the US dollar?

Sophia Kuehnlenz, Bianca Orsi and Annina Kaltenbrunner

Research in International Business and Finance, 2023, vol. 64, issue C

Abstract: The international monetary system is marked by a hierarchical relationship between currencies, where the US dollar is widely used. Recently, central banks have started to launch Central Bank Digital Currencies (CBDCs), which, in contrast to cryptocurrencies, are issued by monetary authorities. The purpose of this paper is (i) to analyse and explain domestic retail CBDCs in detail, and (ii) to assess whether the creation of CBDCs poses a threat to the US dollar as the key currency of the international monetary and financial system. It will be argued that, despite the innovations a CBDC may bring, the role of the US dollar will not be affected by the introduction of multiple CBDCs (mCBDCs) alone. Although mCBDC arrangements might decentralise the international payment system, the underlying structures supporting today's unipolar system would not automatically change. It is crucial that central banks work together to establish an alternative international monetary system.

Keywords: Central Bank Digital Currency (CBDC); Cross-border payments; Currency hierarchy; International payment structures; International monetary system; International financial system (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:64:y:2023:i:c:s0275531922002203

DOI: 10.1016/j.ribaf.2022.101834

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