The determinants of issuing central bank digital currencies

Alfar, Abdelrahman J.K.; Kumpamool, Chamaiporn; Nguyen, Dung T.K.; Ahmed, Rizwan

Abstract

Central Bank Digital Currencies (CBDC) are considered ‘digital fiat currencies’ that do not have a physical form, which is a key distinction from conventional fiat money. This study aims to identify factors that influence central banks’ decisions in taking advanced actions to issue CBDC, namely, the economic, market, demographic and technical factors. Data is collected from the CBDC Tracker and the WB database for the period 2013–2021. We applied the Pooled OLS estimations to examine the impact of the key factors on being in an advanced stage for issuing CBDC; moreover, probit and logistic regression are employed to robust our results and overcome the limitations of Pooled OLS. The findings demonstrate that underdeveloped economies are more engaged in issuing CBDC. Besides, better regulations, FDI inflow, young populations, and more urban societies would increase the probability of CBDC issuance. Nevertheless, results show the impact of technical factors is heterogeneous across countries.

• Journal Article Type: Article
• Acceptance Date: Jan 15, 2023
• Publication Date: 2023-01
• Deposit Date: Feb 17, 2025
• Journal: Research in International Business and Finance
• Print ISSN: 0275-5319
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 64
• Pages: 101884
• DOI: https://doi.org/10.1016/j.ribaf.2023.101884
• Additional Information: This article is maintained by: Elsevier; Article Title: The determinants of issuing central bank digital currencies; Journal Title: Research in International Business and Finance; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.ribaf.2023.101884; Content Type: article; Copyright: © 2023 Elsevier B.V. All rights reserved.