The Role of CBDC in Green Finance and Sustainable Development

Qing Yang, Mingbo Zheng and Yunliang Wang

Emerging Markets Finance and Trade, 2023, vol. 59, issue 15, 4158-4173

Abstract: Central bank digital currency (CBDC) has been the global hot issue in financial and money filed, and is expected to serve as the core digital infrastructure in the future. The environmental impact of CBDC is essential to sustainable development, and it remains debates to scholars, entrepreneurs, and policymakers. This article aims in exploring how CBDC in China affects green finance and sustainable development practically through an empirical investigation on CBDC pilot program. The results suggest that CBDC significantly promotes the issuing of green bonds. Specifically, CBDC increases green bonds issuing more in manufacturing industries, and in state-owned enterprises. Moreover, CBDC is found to decrease SO2 emission, NOx emission, Smoke emission, and improve green land ratio, which is beneficial to sustainable development. Our findings offer a preliminary exposition about the environmental impact of CBDC. We argue that, CBDC is useful to accelerate green finance and hence advances sustainable development, which needs future robust empirical examination. We present some implications of issuing CBDC for policymakers around the world.

Date: 2023
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DOI: 10.1080/1540496X.2023.2185096

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