Central Bank Digital Currencies: A Comprehensive Study of Characteristics, Implications and Future Perspectives

Abstract

The advent of the modern digital age has changed the way money is used and payments are made. A groundbreaking financial innovation created in response to the changing digital economic environment is the Central Bank Digital Currency (CBDC). The primary objective of this paper is to examine the novel features of CBDC and consider the far-reaching implications for the current financial system. This paper first examines the nature and objectives of CBDC. The distinctiveness of CBDC in the currency issuance and payment systems, as well as its potential impact on the current payment industry, is highlighted in our comparisons of CBDC with conventional currencies, cryptocurrencies, and online payment methods, respectively. However, the digital aspect of CBDC also raises issues of digital divide and privacy. Finally, we highlight the critical role of the government in the creation and oversight of CBDCs. In conclusion, this article offers a thorough viewpoint that explores the ideas, advantages, and disadvantages of CBDC and provides crucial insights into the future growth of CBDC and its influence on the future financial system.