Complementing Money Functions: Central Bank Digital Currencies and Currency Competition

Jorg J. Dotsch () and Tamas Ginter ()
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Jorg J. Dotsch: Andrassy Universitat Budapest
Tamas Ginter: Andrassy Universitat Budapest

Financial and Economic Review, 2024, vol. 23, issue 1, 50-75

Abstract: Central bank digital currencies (CBDCs) are currently one of the most vital issues in monetary policy worldwide. While several aspects of the emergence of digital currencies have been addressed in the respective literature, little focus has been directed to one important underlying parameter: the new role of technology in the digital age, which complements the traditional money functions and hence may exert an effect on currency competition. In this paper, we first provide an overview of money functions, currency competition and digital money. We then state that with the emergence of CBDCs, technology has become a new and important functional parameter born by the CBDC itself. We conclude that while technological competition has arisen as a factor of currency competition, stability remains its most decisive factor.

Keywords: CBDC; digitalisation; currency competition (search for similar items in EconPapers)
JEL-codes: E42 E58 O33 (search for similar items in EconPapers)
Date: 2024
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