Work

Can Central Bank Digital Currencies Promote the Internationalization of Currencies?

Year: 2025

Type: article

Abstract: ABSTRACT Using multinational data (2000–2023), this study employed system GMM and fixed‐effects models to examine CBDC's impact on currency internationalization through a framework measuring ‘market acceptance’ and ‘policy drive.’ The results indicated that CBDC advancement significantly promotes currency internationalization. Proactive CBDC policies exerted a positive effect, yet high policy announcement frequency triggered negative repercussions. Mechanism tests confirmed CBDC facilitates currency internationalization through ‘market acceptance’ and ‘policy drive’ dimensions across financial and trade domains. Additionally, simultaneous development of retail and wholesale CBDC demonstrated enhanced effects. These findings provide valuable insights for central banks' differentiated CBDC development strategies and precise policy communication.

Source: European Financial Management

DOI: 10.1111/eufm.70039

Author: Haodong Gu

Institution: Sun Yat-sen University

Language: English

Topic: Global Financial Crisis and Policies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Partnerships for the goals

Open Access status: hybrid

Estimated APC paid: $3,350