IDEAS home Printed from https://ideas.repec.org/a/gam/joitmc/v7y2021i1p72-d504859.html
   My bibliography  Save this article

Central Banks Digital Currency: Detection of Optimal Countries for the Implementation of a CBDC and the Implication for Payment Industry Open Innovation

Author

Listed:
  • Sergio Luis Náñez Alonso

    (DEKIS Research Group, Department of Economics, Catholic University of Ávila, 05005 Avila, Spain)

  • Javier Jorge-Vazquez

    (DEKIS Research Group, Department of Economics, Catholic University of Ávila, 05005 Avila, Spain)

  • Ricardo Francisco Reier Forradellas

    (DEKIS Research Group, Department of Economics, Catholic University of Ávila, 05005 Avila, Spain)

Abstract

This article analyzes the current situation of Central Bank Digital Currencies (CBDCs), which are digital currencies backed by a central bank. It introduces their current status, and how several countries and currency areas are considering their implementation, following in the footsteps of the Bahamas (which has already implemented them in its territory), China (which has already completed two pilot tests) and Uruguay (which has completed a pilot test). First, the sample of potential candidate countries for establishing a CBDC was selected. Second, the motives for implementing a CBDC were collected, and variables were assigned to these motives. Once the two previous steps had been completed, bivariate correlation statistical methods were applied (Pearson, Spearman and Kendall correlation), obtaining a sample of the countries with the highest correlation with the Bahamas, China, and Uruguay. The results obtained show that the Baltic Sea area (Lithuania, Estonia, and Finland) is configured within Europe as an optimal area for implementing a CBDC. In South America, Uruguay (already included in the comparison) and Brazil show very positive results. In the case of Asia, together with China, Malaysia also shows a high correlation with the three pioneer countries, and finally, on the African continent, South Africa is the country that stands out as the most optimal area for implementing a CBDC.

Suggested Citation

  • Sergio Luis Náñez Alonso & Javier Jorge-Vazquez & Ricardo Francisco Reier Forradellas, 2021. "Central Banks Digital Currency: Detection of Optimal Countries for the Implementation of a CBDC and the Implication for Payment Industry Open Innovation," JOItmC, MDPI, vol. 7(1), pages 1-23, February.
  • Handle: RePEc:gam:joitmc:v:7:y:2021:i:1:p:72-:d:504859
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2199-8531/7/1/72/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2199-8531/7/1/72/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dirk Niepelt, 2020. "Reserves for All? Central Bank Digital Currency, Deposits, and Their (Non)-Equivalence," International Journal of Central Banking, International Journal of Central Banking, vol. 16(3), pages 211-238, June.
    2. Kumhof, Michael & Noone, Clare, 2018. "Central bank digital currencies - design principles and balance sheet implications," Bank of England working papers 725, Bank of England.
    3. Michael D. Bordo & Andrew T. Levin, 2017. "Central Bank Digital Currency and the Future of Monetary Policy," NBER Working Papers 23711, National Bureau of Economic Research, Inc.
    4. Raphael A. Auer & Giulio Cornelli & Jon Frost, 2020. "Rise of the Central Bank Digital Currencies: Drivers, Approaches and Technologies," CESifo Working Paper Series 8655, CESifo.
    5. Tomaso Aste, 2019. "Cryptocurrency market structure: connecting emotions and economics," Papers 1903.00472, arXiv.org.
    6. Tomaso Aste, 2019. "Cryptocurrency market structure: connecting emotions and economics," Digital Finance, Springer, vol. 1(1), pages 5-21, November.
    7. Jon Frost & Hyun Song Shin & Peter Wierts, 2020. "An early stablecoin? The Bank of Amsterdam and the governance of money," Working Papers 696, DNB.
    8. Sergio Luis Náñez Alonso & Javier Jorge-Vazquez & Ricardo Francisco Reier Forradellas, 2020. "Detection of Financial Inclusion Vulnerable Rural Areas through an Access to Cash Index: Solutions Based on the Pharmacy Network and a CBDC. Evidence Based on Ávila (Spain)," Sustainability, MDPI, vol. 12(18), pages 1-33, September.
    9. Raphael Auer & Rainer Boehme, 2020. "The technology of retail central bank digital currency," BIS Quarterly Review, Bank for International Settlements, March.
    10. Ulrich Bindseil, 2019. "Central Bank Digital Currency: Financial System Implications and Control," International Journal of Political Economy, Taylor & Francis Journals, vol. 48(4), pages 303-335, October.
    11. Walter Engert & Ben Fung, 2017. "Central Bank Digital Currency: Motivations and Implications," Discussion Papers 17-16, Bank of Canada.
    12. Meaning, Jack & Dyson, Ben & Barker, James & Clayton, Emily, 2018. "Broadening narrow money: monetary policy with a central bank digital currency," Bank of England working papers 724, Bank of England.
    13. Stephen Chan & Jeffrey Chu & Yuanyuan Zhang & Saralees Nadarajah, 2020. "Blockchain and Cryptocurrencies," JRFM, MDPI, vol. 13(10), pages 1-3, September.
    14. Pelin Berkmen & Kotaro Ishi & Mr. Javier Arze del Granado & Miss Marie S Kim & Mrs. Marina V Rousset & Ms. Kimberly Beaton & Emanuel Kopp & Mr. Dmitry Gershenson, 2019. "Fintech in Latin America and the Caribbean: Stocktaking," IMF Working Papers 2019/071, International Monetary Fund.
    15. Sergio Luis Náñez Alonso & Miguel Ángel Echarte Fernández & David Sanz Bas & Jarosław Kaczmarek, 2020. "Reasons Fostering or Discouraging the Implementation of Central Bank-Backed Digital Currency: A Review," Economies, MDPI, vol. 8(2), pages 1-27, May.
    16. Nikola Fabris, 2019. "Cashless Society – The Future of Money or a Utopia?," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 8(1), pages 53-66.
    17. Max Raskin & David Yermack, 2016. "Digital Currencies, Decentralized Ledgers, and the Future of Central Banking," NBER Working Papers 22238, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Paulo Rupino Cunha & Paulo Melo & Helder Sebastião, 2021. "From Bitcoin to Central Bank Digital Currencies: Making Sense of the Digital Money Revolution," Future Internet, MDPI, vol. 13(7), pages 1-19, June.
    2. Sergio Luis Náñez Alonso & Javier Jorge-Vázquez & Miguel Ángel Echarte Fernández & Ricardo Francisco Reier Forradellas, 2021. "Cryptocurrency Mining from an Economic and Environmental Perspective. Analysis of the Most and Least Sustainable Countries," Energies, MDPI, vol. 14(14), pages 1-22, July.
    3. David Sanz-Bas & Carlos del Rosal & Sergio Luis Náñez Alonso & Miguel Ángel Echarte Fernández, 2021. "Cryptocurrencies and Fraudulent Transactions: Risks, Practices, and Legislation for Their Prevention in Europe and Spain," Laws, MDPI, vol. 10(3), pages 1-20, July.
    4. Filiz Karpuz & Erdal Güryay & Dervis Kirikkaleli, 2021. "Sustainable-Performance Instrument Development and Validation in the Northern Cyprus Banking Sector," Sustainability, MDPI, vol. 13(14), pages 1-14, July.
    5. Miguel Ángel Echarte Fernández & Sergio Luis Náñez Alonso & Javier Jorge-Vázquez & Ricardo Francisco Reier Forradellas, 2021. "Central Banks’ Monetary Policy in the Face of the COVID-19 Economic Crisis: Monetary Stimulus and the Emergence of CBDCs," Sustainability, MDPI, vol. 13(8), pages 1-18, April.
    6. Omodero Cordelia Onyinyechi, 2021. "Fintech Innovation in the Financial Sector: Influence of E-Money Products on a Growing Economy," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 31(4), pages 40-53, December.
    7. Shamil Shovkhalov & Hussein Idrisov, 2021. "Economic and Legal Analysis of Cryptocurrency: Scientific Views from Russia and the Muslim World," Laws, MDPI, vol. 10(2), pages 1-17, May.
    8. Wang, Yizhi & Lucey, Brian M. & Vigne, Samuel A. & Yarovaya, Larisa, 2022. "The Effects of Central Bank Digital Currencies News on Financial Markets," Technological Forecasting and Social Change, Elsevier, vol. 180(C).
    9. Bhaskar, Ratikant & Hunjra, Ahmed Imran & Bansal, Shashank & Pandey, Dharen Kumar, 2022. "Central Bank Digital Currencies: Agendas for future research," Research in International Business and Finance, Elsevier, vol. 62(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marc Sanchez-Roger & Esther Puyol-Antón, 2021. "Digital Bank Runs: A Deep Neural Network Approach," Sustainability, MDPI, vol. 13(3), pages 1-18, February.
    2. Sergio Luis Náñez Alonso & Miguel Ángel Echarte Fernández & David Sanz Bas & Jarosław Kaczmarek, 2020. "Reasons Fostering or Discouraging the Implementation of Central Bank-Backed Digital Currency: A Review," Economies, MDPI, vol. 8(2), pages 1-27, May.
    3. Paulo Rupino Cunha & Paulo Melo & Helder Sebastião, 2021. "From Bitcoin to Central Bank Digital Currencies: Making Sense of the Digital Money Revolution," Future Internet, MDPI, vol. 13(7), pages 1-19, June.
    4. Marcelo A. T. Aragão, 2021. "A Few Things You Wanted to Know about the Economics of CBDCs, but were Afraid to Model: a survey of what we can learn from who has done," Working Papers Series 554, Central Bank of Brazil, Research Department.
    5. Bhaskar, Ratikant & Hunjra, Ahmed Imran & Bansal, Shashank & Pandey, Dharen Kumar, 2022. "Central Bank Digital Currencies: Agendas for future research," Research in International Business and Finance, Elsevier, vol. 62(C).
    6. Alexandra Mitschke, 2021. "Central Bank Digital Currencies and Monetary Policy Effectiveness in the Euro Area," Working Papers Dissertations 74, Paderborn University, Faculty of Business Administration and Economics.
    7. Arauz, Andrés & Garratt, Rodney & Ramos F., Diego F., 2021. "Dinero Electrónico: The rise and fall of Ecuador's central bank digital currency," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 2(2).
    8. Agur, Itai & Ari, Anil & Dell’Ariccia, Giovanni, 2022. "Designing central bank digital currencies," Journal of Monetary Economics, Elsevier, vol. 125(C), pages 62-79.
    9. Jiaqi Li, 2021. "Predicting the Demand for Central Bank Digital Currency: A Structural Analysis with Survey Data," Staff Working Papers 21-65, Bank of Canada.
    10. Cyril Monnet & Hyun Song Shin & Jon Frost & Leonardo Gambacorta & Raphael Auer & Tara Rice, 2022. "Central Bank Digital Currencies: Motives, Economic Implications, and the Research Frontier," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 697-721, August.
    11. Böser, Florian & Gersbach, Hans, 2020. "Monetary Policy with a Central Bank Digital Currency: The Short and the Long Term," CEPR Discussion Papers 15322, C.E.P.R. Discussion Papers.
    12. Geoffrey Goodell & Hazem Danny Al-Nakib & Paolo Tasca, 2020. "Digital Currency and Economic Crises: Helping States Respond," Papers 2006.03023, arXiv.org, revised Aug 2020.
    13. Thitima Chucherd & Chanokkarn Mek-yong & Nalin Nookhwun & Passawuth Nuntnarumit & Natta Piyakarnchana & Suparit Suwanik, 2021. "Monetary and Financial Perspectives on Retail CBDC in the Thai Context," PIER Discussion Papers 152, Puey Ungphakorn Institute for Economic Research.
    14. Dirk Niepelt, 2020. "Monetary Policy with Reserves and CBDC: Optimality, Equivalence, and Politics," CESifo Working Paper Series 8712, CESifo.
    15. Jooyong Jun & Eunjung Yeo, 2021. "Central bank digital currency, loan supply, and bank failure risk: a microeconomic approach," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-22, December.
    16. Hossein Nabilou, 2020. "Testing the waters of the Rubicon: the European Central Bank and central bank digital currencies," Journal of Banking Regulation, Palgrave Macmillan, vol. 21(4), pages 299-314, December.
    17. Romain Baeriswyl & Samuel Reynard & Alexandre Swoboda, 2021. "Retail CBDC purposes and risk transfers to the central bank," Working Papers 2021-19, Swiss National Bank.
    18. Paolo Fegatelli, 2019. "Central bank digital currencies: The case of universal central bank reserves," BCL working papers 130, Central Bank of Luxembourg.
    19. Ozili, Peterson K, 2021. "Central bank digital currency can lead to the collapse of cryptocurrency," MPRA Paper 111218, University Library of Munich, Germany.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:joitmc:v:7:y:2021:i:1:p:72-:d:504859. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://www.mdpi.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.