Asian CBDCs on the rise: An in-depth analysis of developments and implications

Abstract

In this paper, we present an in-depth analysis of Central Bank Digital Currencies (CBDCs), focusing on their definition, purpose, design considerations and recent developments. We also delve into the potential advantages of CBDCs for Asia, such as enhancing convenience, precisely quantifying economic metrics, managing anonymity, catalyzing innovation, and promoting financial inclusion. Moreover, we examine how CBDCs can fortify monetary and fiscal policies, ensure safe distribution, reduce costs and combat corruption. We also address the risks associated with CBDC adoption in Asia and explore potential outcomes such as substitution effects, valuation fluctuations, and foreign currency dependence, while highlighting the importance of managing financial imbalances, holdings concentration and public apprehension toward digital currencies.