![Sample our Geography journals, sign in here to start your FREE access for 14 days]({"type":"image" , "src" : "/sda/5937/TOC-Subject-Sample-2021-Geography.jpg"})
ABSTRACT
Initiatives to develop central bank digital currencies (CBDCs) have accelerated dramatically across the world in the last few years. What is their significance for longstanding scholarly debates about the fate of monetary sovereignty in the digital age? Public officials themselves state that a central reason for these initiatives is to defend monetary sovereignty against threats emanating from the growth of private digital currencies, foreign CBDCs, and the displacement of state issued cash by private digital payments instruments. They (and others) highlight how CBDCs could even strengthen monetary sovereignty by bolstering financial inclusion as well as enhancing the state’s capacity to monitor and control monetary transactions and conduct monetary policy. In these ways, CBDC initiatives cast doubt on arguments that suggest the digital currency revolution necessarily challenges monetary sovereignty. However, critics of that line of argument also need to be cautious because CBDCs are already attracting much political opposition. Even if that opposition is overcome, CBDCs may be implemented in constrained ways or be unsuccessful in meeting their goals for other reasons. In short, CBDCs may hold the potential to defend and even strengthen monetary sovereignty, but it is far from clear whether this potential will be realised.
DISCLOSURE STATEMENT
No potential conflict of interest was reported by the author(s).
Notes
1 Some definitions of CBDCs include deposits that commercial banks have long held in electronic form at their country’s central bank as reserves. In this paper, we focus on new ‘retail’ CBDCs, following the US Federal Reserve’s (Citation2022, p. 1) definition of CBDCs as ‘a digital liability of a central bank that is widely available to the general public’.
2 These countries are The Bahamas, Jamaica, Nigeria and the eight countries using the Eastern Caribbean dollar. See https://www.atlanticcouncil.org/cbdctracker/
3 For recent analyses linking these developments to declining monetary sovereignty, see Sturn (Citation2022) and Martino (Citation2023).
4 For recent analyses of the content and dynamics of regulatory politics vis-à-vis private digital money in various jurisdictions, see Chey (Citation2022), Marple (Citation2021) and Campbell-Verduyn (Citation2018).
5 Oher conceptions of monetary sovereignty exist, but we focus on this ‘territorial currency’ one which has been crucial to scholarly debates and official discussions about the implications of the digital currency revolution. Later in the paper, we also refer briefly to the more policy-oriented concept of ‘monetary policy sovereignty’.
6 A stablecoin is ‘a cryptocurrency that aims to maintain a stable value relative to a specified asset, or a pool or basket of assets’ (BIS, Citation2022, p. 114).
7 See also Treasury Secretary Janet Yellen’s views (Silverman, Citation2021) as well as those of senators such as Elizabeth Warren (Guida, Citation2021).
8 See also Bank of England (Citation2021b), Federal Reserve (Citation2022, p. 14) and Usher et al. (Citation2021).
9 See for example ECB (Citation2020, p. 22).
10 As noted by the Group of Central Banks (Citation2020, p. 8), people might still try to avoid negative rates by turning to foreign currency or private cryptocurrencies.
11 For an overview of the debates on these issues, see Bindseil (Citation2019).
12 Quoted in Armstrong (Citation2023). For other examples of this kind of opposition see Arnold and Fleming (Citation2023), Peebles (Citation2021), Guida (Citation2021), Schreckinger (Citation2023), Sutton (Citation2022) and Tasker (Citation2022).
13 For technological solutions, see Carstens (Citation2021, p. 111), Fanti et al. (Citation2022), BIS (Citation2022, pp. 95–96), Group of Central Banks (Citation2021, p. 8). For arguments about private control, see for example ECB (Citation2020, p. 7).