The Autonomy of Central Banks and Digital Currency: A Macroeconomic Perspective

Abstract

Many central banks across the globe are experiencing different phases of implementation of central bank digital currencies (CBDCs) – some central banks have already initiated digital currencies or are in experimentation phases or introduced as a pilot project, each one at various operational challenges open to central banks toward building the digital currency framework. This chapter attempts to establish the state of digital currencies experienced by different economies across the world. The chapter highlights the underlying reasons behind the implementation of CBDCs by countries; the challenges and implications of the introduction of such digital currency on monetary policy; the role of CBDC in bringing societal benefits towards financial inclusion and sustainable finance; and finally, the regulatory framework set up to safeguard at the interest of national security. These inter-related issues are examined based on experiences from different economies of the world. Further, a sample study for India's CBDC development is evaluated as country specific study.