The Role of Central Bank Digital Currencies (CBDCs) in Reshaping Monetary Policy: A Global Analysis of Economic Implications and Implementation Challenges.

Abstract

Purpose:
The research seeks to understand the significance of Central Bank Digital Currencies (CBDCs) in influencing and reshaping monetary policy on a global scale. It delves into the potential economic consequences, both positive and negative, of CBDC implementation, and the challenges central banks might face during the implementation phase.

Theoretical framework:

The paper leverages on the modern monetary theory, digital economy frameworks, and the evolution of digital finance. It combines these constructs with the historical role of central banks to hypothesize how CBDCs could redefine traditional monetary structures.

Findings:
Results show that CBDCs have the potential to significantly enhance monetary policy effectiveness, especially in realms of financial inclusion, transmission mechanisms, and real-time data acquisition. However, challenges such as technological limitations, privacy concerns, and international coordination issues could impede their widespread adoption.

Research, Practical & Social implications:

The findings offer central banks a comprehensive guide to anticipate potential challenges and benefits of CBDCs. From a societal perspective, the research highlights how CBDCs can transform financial accessibility and literacy, but also underscores the importance of addressing privacy and security concerns.

Originality/value:
While numerous studies have evaluated the conceptual design of CBDCs, this research stands out by providing a holistic global analysis of their actual economic implications and practical implementation challenges. It serves as a reference for policymakers and stakeholders in the evolving monetary landscape.