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centralbankdigitalcurrenciesrope2025
Journal article

Central Bank Digital Currencies: Much ado About Nothing?

BP2-STS

  • 2025
Published in:
  • Review of Political Economy. - Informa UK Limited. - 2025, p. 1-16
central bank digital currencies
central banks
payment systems
English Central bank digital currencies (CBDCs) are increasingly becoming a subject matter for a variety of stakeholders in the economy as a whole. In this paper, we will first analyse the nature of CBDCs to show that it is essentially a digital liability of central banks, like today’s settlement balances that banks use in their own transactions. Such a ‘wholesale’ CBDC may exist along a ‘retail’ CBDC, which is the digital version of banknotes that, to date, any non-bank agents can use for their small-value payments. In this perspective, CBDCs are therefore ‘much ado about nothing’, as they just represent the most recent evolution of the form of money. However, in this paper we will also show that such an evolution could have some relevant consequences for monetary policy objectives like financial stability and banks’ solvency if ‘retail’ CBDCs replace banknotes in advanced economies, thereby providing an interesting alternative to bank deposits — particularly if these CBDCs are going to be remunerated by the issuing central banks. The last section will expand on this issue, focusing on the possible reaction of the banking sector, whose aim is and will remain the maximization of banks’ profits over the short run.
Faculty
Faculté des sciences économiques et sociales et du management
Department
Département d'économie politique
Language
  • English
Classification
Economics
License
CC BY-NC-ND
Open access status
hybrid
Identifiers
Persistent URL
https://folia.unifr.ch/unifr/documents/330891
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