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Central bank digital currency

Author

Listed:
  • Grym, Aleksi
  • Heikkinen, Päivi
  • Kauko, Karlo
  • Takala, Kari

Abstract

Central banks have traditionally issued cash to the general public. With digitalisation, banknotes are becoming a technically outdated payment instrument, and some central banks have explored the possibility of central bank-issued electronic money applicable to retail payments. Electronic central bank money would offer the public the possibility to hold central bank money in a potentially cashless future. In its present form, blockchain technology would probably not be a suitable solution, since it is unable to process a sufficiently large number of transactions. Electronic central bank money would potentially have significant implications for other areas of central bank policy, which should be meticulously analysed.

Suggested Citation

  • Grym, Aleksi & Heikkinen, Päivi & Kauko, Karlo & Takala, Kari, 2017. "Central bank digital currency," BoF Economics Review 5/2017, Bank of Finland.
    • Handle: RePEc:zbw:bofecr:52017
    Note: This article was originally published in Finnish under the title ”Digitaalinen keskuspankkiraha”, BoF Economics Review 4/2017: http://urn.fi/URN:NBN:fi:bof-201711031665
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    File URL: https://www.econstor.eu/bitstream/10419/212990/1/bofer-2017-05.pdf
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    References listed on IDEAS

    as
    1. Eduardo Levy Yeyati, 2006. "Financial dollarization: evaluating the consequences [‘A simple model of monetary policy and currency crises’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 21(45), pages 62-118.
    2. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, June.
    3. repec:zbw:bofrdp:2003_008 is not listed on IDEAS
    4. Dwyer, Gerald P., 2015. "The economics of Bitcoin and similar private digital currencies," Journal of Financial Stability, Elsevier, vol. 17(C), pages 81-91.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Allen, Sarah & Capkun, Srdjan & Eyal, Ittay & Fanti, Giulia & Ford, Bryan & Grimmelmann, James & Juels, Ari & Kostiainen, Kari & Meiklejohn, Sarah & Miller, Andrew & Prasad, Eswar & Wüst, Karl & Zhang, 2020. "Design Choices for Central Bank Digital Currency: Policy and Technical Considerations," IZA Discussion Papers 13535, Institute of Labor Economics (IZA).
    2. Grym, Aleksi, 2018. "The great illusion of digital currencies," BoF Economics Review 1/2018, Bank of Finland.
    3. Bibi, Samuele, 2023. "Money in the time of crypto," Research in International Business and Finance, Elsevier, vol. 65(C).
    4. Ozili, Peterson K, 2021. "Central bank digital currency can lead to the collapse of cryptocurrency," MPRA Paper 111218, University Library of Munich, Germany.
    5. Paolo Fegatelli, 2019. "Central bank digital currencies: The case of universal central bank reserves," BCL working papers 130, Central Bank of Luxembourg.
    6. Ozili, Peterson K, 2021. "Central bank digital currency in Nigeria: opportunities and risks," MPRA Paper 110152, University Library of Munich, Germany.
    7. Toshiko Matsui & Daniel Perez, 2021. "Data-driven analysis of central bank digital currency (CBDC) projects drivers," Papers 2102.11807, arXiv.org.
    8. 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.
    9. Belke, Ansgar & Beretta, Edoardo, 2019. "From cash to central bank digital currencies and cryptocurrencies: A balancing act between modernity and monetary stability," Ruhr Economic Papers 816, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. Ansgar Belke & Edoardo Beretta, 2020. "From cash to central bank digital currencies and cryptocurrencies: a balancing act between modernity and monetary stability," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 47(4), pages 911-938, June.
    11. Grym, Aleksi, 2020. "Lessons learned from the world's first CBDC," BoF Economics Review 8/2020, Bank of Finland.

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    More about this item

    Keywords

    money; central banks;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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