Central bank digital currency research around the world: a review of literature
| DOI | https://doi.org/10.1108/JMLC-11-2021-0126 |
| Published date | 07 January 2022 |
| Date | 07 January 2022 |
| Pages | 215-226 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Peterson K. Ozili |
Central bank digital currency
research around the world: a
review of literature
Peterson K. Ozili
Central Bank of Nigeria, Abuja, Nigeria
Abstract
Purpose –The purpose of this paperis to gain some insight into central bank digital currency researchby
reviewing the recent advances in central bank digital currency (CBDC) research in a way that would help
researchers,policy makers and practitioners to take a closerlook at CBDC.
Design/methodology/approach –The paper usesa systematic literature review methodology.
Findings –The review shows a generalconsensus that a CBDC is a liability of the central bank and it has
cash-like attributes.The review also presents the motivation and benefits of issuing a CBDC suchas the need
to increase financial inclusion, the need to improve the conduct of monetary policy and to foster efficient
digital payments. The review also shows that many central banks are researching the potential to issue
CBDCs due to its many benefits. However,a number of studies have called for caution against over-optimism
about the potential benefits of CBDC due to the limiting nature of CBDC design and its inability to meet
multiple competing goals. Suggested areas for future research are identified such as the need to find the
optimal CBDC design that meets all competing objectives, the need for empirical evidence on the effect of
CBDC on the cost of credit and financial stability,and the need to find a balance between limiting the CBDC
holdings of users and allowing usersto hold as much CBDC as they want, and there is a need to undertake
country-specificand regional case studies of CBDC design.
Originality/value –This review paper offers new areas for further research in central bank digital
currencies.
Keywords Digital currency, Money, Central bank, Central bank digital currency, CBDC,
Digital finance, Cryptocurrency, Financial inclusion, CBDC design, Blockchain,
Distributed ledger technology
Paper type Literature review
1. Introduction
This paper aims to provide a review of central bank digital currency (CBDC) research. It is
important to understand the events thatled to the rise of CBDCs, and it is also important to
take stock of knowledge on CBDC and providean understanding of its wide implications in
the economy.
The rapid shift in focus from “Fintech”which emerged in the last decade and then to
“cryptocurrency”and then to “CBDC”which is a more recent innovation shows that the
digital finance landscape is changing very rapidly.The cryptocurrency boom between 2017
and 2021 witnessed an influx of private cryptocurrencies especially between 2019 and 2021
such as bitcoins, dogecoin, ethereum and litecoin. Although limited in supply, people held
cryptocurrency either as a medium of exchange or as an investment asset class. The
limited supply of cryptocurrency. The limited suppy of cryptocurrency and the high
demand for cryptocurrency led to a significant increasein the price of cryptocurrencies and
JEL classification –E42, E44, E52, E58
Central bank
digital
currency
research
215
Journalof Money Laundering
Control
Vol.26 No. 2, 2023
pp. 215-226
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-11-2021-0126
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
To continue reading
Request your trial