The Impact of Central Bank Digital Currencies (CBDCs) on Global Financial Systems in the G20 Country GVAR Approach

Nesrine Gafsi ()
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Nesrine Gafsi: Department of Finance, College of Business, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 11564, Saudi Arabia

FinTech, 2025, vol. 4, issue 3, 1-21

Abstract: This paper considers the impact of Central Bank Digital Currencies (CBDCs) on the world’s financial systems with a special emphasis on G20 economies. Using quarterly macro-financial data for the period of 2000 to 2024, collected from the IMF, BIS, World Bank, and Atlantic Council, a Global Vector Autoregression (GVAR) model is applied to 20 G20 countries. The results reveal significant heterogeneity across economies: CBDC shocks intensify emerging market financial instability (e.g., India, Brazil), while more digitally advanced countries (e.g., UK, Japan) experience stabilization. Retail CBDCs increase disintermediation risks in more fragile banking systems, while wholesale CBDCs improve cross-border liquidity. This article contributes to the literature by providing the first GVAR-based estimation of CBDC spillovers globally.

Keywords: CBDCs; global financial systems; GVAR; capital flows; financial stability; monetary policy; digital transformation; G20 economies; disintermediation risk; spillover effects (search for similar items in EconPapers)
JEL-codes: C6 F3 G O3 (search for similar items in EconPapers)
Date: 2025
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