Central Bank Digital Currencies: An Old Tale with a New Chapter

Michael Bordo and William Roberds

No 2022-18, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: We consider the debut of a new monetary instrument, central bank digital currencies (CBDCs). Drawing on examples from monetary history, we argue that a successful monetary transformation must combine microeconomic efficiency with macroeconomic credibility. A paradoxical feature of these transformations is that success in the micro dimension can encourage macro failure. Overcoming this paradox may require politically uncomfortable compromises. We propose that such compromises will be necessary for the success of CBDCs.

Keywords: banknotes; central banks; digital currencies; monetary systems (search for similar items in EconPapers)
JEL-codes: E42 E58 N10 (search for similar items in EconPapers)
Pages: 34
Date: 2022-12-18
New Economics Papers: this item is included in nep-ban, nep-his, nep-mon and nep-pay
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Published in 2022

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Working Paper: Central Bank Digital Currencies, an Old Tale With a New Chapter (2022)
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DOI: 10.29338/wp2022-18

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