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The Impact of Central Bank Digital Currencies (CBDCs) on Global Financial Systems in the G20 Country GVAR Approach

Author

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  • Nesrine Gafsi

    (Department of Finance, College of Business, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 11564, Saudi Arabia)

Abstract

This paper considers the impact of Central Bank Digital Currencies (CBDCs) on the world’s financial systems with a special emphasis on G20 economies. Using quarterly macro-financial data for the period of 2000 to 2024, collected from the IMF, BIS, World Bank, and Atlantic Council, a Global Vector Autoregression (GVAR) model is applied to 20 G20 countries. The results reveal significant heterogeneity across economies: CBDC shocks intensify emerging market financial instability (e.g., India, Brazil), while more digitally advanced countries (e.g., UK, Japan) experience stabilization. Retail CBDCs increase disintermediation risks in more fragile banking systems, while wholesale CBDCs improve cross-border liquidity. This article contributes to the literature by providing the first GVAR-based estimation of CBDC spillovers globally.

Suggested Citation

  • Nesrine Gafsi, 2025. "The Impact of Central Bank Digital Currencies (CBDCs) on Global Financial Systems in the G20 Country GVAR Approach," FinTech, MDPI, vol. 4(3), pages 1-21, July.
    • Handle: RePEc:gam:jfinte:v:4:y:2025:i:3:p:35-:d:1708676
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    References listed on IDEAS

    as
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    2. Beniak, Patrycja, 2019. "Central bank digital currency and monetary policy: a literature review," MPRA Paper 96663, University Library of Munich, Germany.
    3. Tingting Zheng & Chenchen Song & Liu Cao, 2025. "The Role of Policy Narrative Intensity in Accelerating Renewable Energy Innovation: Evidence from China’s Energy Transition," Energies, MDPI, vol. 18(11), pages 1-28, May.
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    5. Ruimin Song & TIntian Zhao & Chunhui Zhou, 2023. "Empirical Analysis of the Impact of Legal Tender Digital Currency on Monetary Policy -Based on China's Data," Papers 2310.07326, arXiv.org.
    6. Agur, Itai & Ari, Anil & Dell’Ariccia, Giovanni, 2022. "Designing central bank digital currencies," Journal of Monetary Economics, Elsevier, vol. 125(C), pages 62-79.
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    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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