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Complementing Money Functions: Central Bank Digital Currencies and Currency Competition

Author

Listed:
  • Jorg J. Dotsch

    (Andrassy Universitat Budapest)

  • Tamas Ginter

    (Andrassy Universitat Budapest)

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.

Suggested Citation

  • Jorg J. Dotsch & Tamas Ginter, 2024. "Complementing Money Functions: Central Bank Digital Currencies and Currency Competition," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 23(1), pages 50-75.
    • Handle: RePEc:mnb:finrev:v:23:y:2024:i:1:p:50-75
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    References listed on IDEAS

    as
    1. Friedman, Milton, 2002. "Capitalism and Freedom," University of Chicago Press Economics Books, University of Chicago Press, number 9780226264202.
    2. Janina Harasim, 2016. "Europe: The Shift from Cash to Non-Cash Transactions," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Jakub Górka (ed.), Transforming Payment Systems in Europe, chapter 2, pages 28-69, Palgrave Macmillan.
    3. Wolfgang Kerber & Heike Schweitzer, 2017. "Interoperability in the digital economy," MAGKS Papers on Economics 201712, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    4. Friedman, Milton, 2002. "Capitalism and Freedom," University of Chicago Press Economics Books, University of Chicago Press, number 9780226264219, Febrero.
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    More about this item

    Keywords

    CBDC; digitalisation; currency competition;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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