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Currency substitution in a world of looming retail CBDCs: Suggestive currency substitution-based evidence

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  • Chen, Hongyi
  • Siklos, Pierre L.

Abstract

Digitalization, spurred by the pandemic, has accelerated plans by many central banks to introduce retail digital currencies (rCBDCs). If international coordination eventually allows individuals to hold digital multiple currencies this potentially implies greater scope for currency substitution. The potential to ease constraints on currency substitution dovetails nicely with the G20′s continuing aspiration to enhance digitalization as a “tool” to improve economic performance and reduce inequality. Nevertheless, as discussed in our study, opportunities for individuals and small businesses to exploit the promise of lower transactions costs thanks to digitalization will be difficult to realize in the current regulatory and geopolitical environment.

Suggested Citation

  • Chen, Hongyi & Siklos, Pierre L., 2023. "Currency substitution in a world of looming retail CBDCs: Suggestive currency substitution-based evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:intfin:v:88:y:2023:i:c:s1042443123000963
    DOI: 10.1016/j.intfin.2023.101828
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    Cited by:

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    3. Hanan Qudah, 2026. "Tracing the development of environmental, social and governance (ESG) performs: a systematic review and bibliometric analysis," Future Business Journal, Springer, vol. 12(1), pages 1-20, December.
    4. Rizwan, Muhammad Suhail & Ahmad, Ghufran & Qureshi, Anum, 2025. "Central bank digital currency and systemic risk," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 99(C).

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    More about this item

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; 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
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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