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Thinking Fast and Slow about Central Bank Digital Currencies

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  • Ozili, Peterson K

Abstract

Central banks are considering the issuance of a central bank digital currency to serve as a payment tool to support economic activities. A central bank digital currency can also serve secondary purposes that are related or unrelated to the statutory objectives of a central bank which is monetary and price stability. Many central banks are thinking too fast about central bank digital currencies – they are very optimistic about the potential benefits of central bank digital currencies. While such optimism is good, central banks also need to think slowly about central bank digital currency by paying serious attention to known risks and whether there is a unique use case for CBDC. This calls for cautious optimism and a need for central banks to think fast and slow about central bank digital currencies.

Suggested Citation

  • Ozili, Peterson K, 2024. "Thinking Fast and Slow about Central Bank Digital Currencies," MPRA Paper 120774, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:120774
    as

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    File URL: https://mpra.ub.uni-muenchen.de/120774/1/MPRA_paper_120774.pdf
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    References listed on IDEAS

    as
    1. Ozili, Peterson K, 2023. "Theories supporting central bank digital currency development and its usefulness," MPRA Paper 117806, University Library of Munich, Germany.
    2. Peterson K. Ozili, 2023. "A Survey of Central Bank Digital Currency Adoption in African Countries," Advances in African Economic, Social and Political Development, in: David Mhlanga & Emmanuel Ndhlovu (ed.), The Fourth Industrial Revolution in Africa, chapter 0, pages 273-289, Springer.
    3. Ozili, Peterson K, 2023. "eNaira central bank digital currency (CBDC) for financial inclusion in Nigeria," MPRA Paper 115781, University Library of Munich, Germany.
    4. Jesus Fernandez-Villaverde & Daniel Sanches & Linda Schilling & Harald Uhlig, 2021. "Central Bank Digital Currency: Central Banking For All?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 41, pages 225-242, July.
    5. Marion Laboure & Markus H.‐P. Müller & Gerit Heinz & Sagar Singh & Stefan Köhling, 2021. "Cryptocurrencies and CBDC: The Route Ahead," Global Policy, London School of Economics and Political Science, vol. 12(5), pages 663-676, November.
    6. Ozili, Peterson K, 2023. "A Survey of Central Bank Digital Currency Adoption in African countries," MPRA Paper 118794, University Library of Munich, Germany.
    7. Bofinger, Peter & Haas, Thomas, 2020. "CBDC: Can central banks succeed in the marketplace for digital monies?," CEPR Discussion Papers 15489, C.E.P.R. Discussion Papers.
    8. Khiaonarong, Tanai & Humphrey, David, 2019. "Cash use across countries and the demand for central bank digital currency," Journal of Payments Strategy & Systems, Henry Stewart Publications, vol. 13(1), pages 32-46, March.
    9. Ozili, Peterson K, 2023. "CBDC, Fintech and cryptocurrency for financial Inclusion and financial stability," MPRA Paper 115768, University Library of Munich, Germany.
    10. Jorge Abad & Galo Nuño Barrau & Carlos Thomas, 2023. "CBDC and the operational framework of monetary policy," BIS Working Papers 1126, Bank for International Settlements.
    11. Peterson K. Ozili, 2023. "Central Bank Digital Currency Can Lead to the Collapse of Cryptocurrency," Contemporary Studies in Economic and Financial Analysis, in: Digital Transformation, Strategic Resilience, Cyber Security and Risk Management, volume 111, pages 191-198, Emerald Group Publishing Limited.
    12. Mr. Tanai Khiaonarong & David Humphrey, 2019. "Cash Use Across Countries and the Demand for Central Bank Digital Currency," IMF Working Papers 2019/046, International Monetary Fund.
    13. Ozili, Peterson K, 2023. "Using central bank digital currency to achieve the sustainable development goals," MPRA Paper 118806, University Library of Munich, Germany.
    14. Ozili, Peterson K, 2023. "Central bank digital currency in India: the case for a digital rupee," MPRA Paper 118801, University Library of Munich, Germany.
    15. Peterson K. Ozili, 2023. "Using Central Bank Digital Currency to Achieve the Sustainable Development Goals," Contemporary Studies in Economic and Financial Analysis, in: Digital Transformation, Strategic Resilience, Cyber Security and Risk Management, volume 111, pages 143-153, Emerald Group Publishing Limited.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    CBDC; central bank digital currency; cryptocurrency; digital payment; thinking fast and slow;
    All these keywords.

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E49 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Other
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other

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