Can Central Bank Digital Currency Increase Financial Inclusion? Arguments for and Against*

Asset-backed securities (ABS), 147 Asset-backed tokenization, 153 Asset-backed tokens (ABTs), 6, 146, 150-154 background, 148-150 benefits of tokenization, 154-155 capital requirements, 171-172 case studies, 156-161 challenges, 155-156 consultation outcomes, 173-176 general principles, 168-171 regulatory issues, 168-176 risks of permissionless DLTS and smart contracts, 161-168 Asset-pricing relationships comparison of cryptocurrency and equity market factors, 100-103 cryptocurrency pricing by equity and crypto factors, 104-108 cryptocurrency pricing by global and regional factors, 108-109 data, 98-100 Association of Proprietary Traders (APT), 174 Auto loans, 154 Automated teller machines (ATMs), 17

This paper explores the impact of Central Bank Digital Currency (CBDC) volatility on the efficiency of monetary policy, focusing on its role in financial inclusion and investment. As the world increasingly embraces digital currencies, central banks are exploring the potential benefits and risks associated with CBDCs. Volatility in CBDCs may have significant implications for the effectiveness of monetary policy, potentially influencing inflation control, interest rates, and economic stability. Moreover, CBDCs' introduction could either enhance or hinder financial inclusion by providing new opportunities for unbanked populations or exacerbating existing disparities. The paper reviews existing literature on CBDCs, highlighting key findings on their volatility and its effects on policy formulation. Furthermore, it assesses how volatility may impact investment decisions, both in terms of risk perception and market behavior. By examining the intersection of monetary policy, financial inclusion, and investment, this paper aims to provide a comprehensive understanding of CBDCs' potential in shaping modern economies. It is critical for policymakers to consider the dynamic nature of CBDC volatility when designing strategies for effective financial inclusion and sustainable investment. The paper concludes by identifying gaps in the current literature and proposing future research directions to further explore CBDC's impact on global economic systems. Ultimately, this review underscores the importance of mitigating volatility to maximize CBDCs' benefits in fostering inclusive economic growth.

Central bank digital currencies (CBDCs) are been designed a ‘new normal’ for the world of finance in which payments (digital currency) can be made directly from one party to another without financial intermediaries regardless macroeconomic links. Digital currency has ushered the world of finance into uncharted waters as central banks and international institutions crumble to fine their feet’s in a fast moving stream of decentralised finance (DeFi) and global stablecoins. As central banks embark on the CBDCs journey, there are number of questions which must be address: What problems are CBDC’s expected to solve? How do current design thinking resolve these problems in Africa? Are there alternatives to CBDCs in Africa ? Broadly, CBDCs are expected to resolve inefficient and costly domestic and cross-border payments and settlement, ensure price stability and financial stability, retain monetary policy independence and digital de-dollarization. A qualitative descriptive design has been adopted in this study.Findings. Central bank digital currencies (CBDCs) well-designed in a new multilateral fair and just international monetary architecture has the potential to ensure price stability and financial stability in both advanced and developing economies in general, but more importantly would enable developing countries to regain some among of monetary policy independence. However, under the CBDCs design thinking within the framework of existing international monetary and financial architecture, no economy in Africa can withstand the powers of BigFintech, DeFi, global stablecoins and foreign sovereign digital currencies. This paper concludes that African countries must decide whether to cede their sovereign power to an independent monetary authority with single digital currency to manage under their control or cede their economic and financial destiny to unaccountable foreign BigFintech and/or foreign sovereign CBDCs in form of digital dollarization. Keywords: digital currency, CBDCs, digital dollarization, international monetary system, Africa DOI: 10.7176/RJFA/12-18-03 Publication date: September 30 th 2021

This explores the implications of digital currencies for monetary policy and central banking in Africa, focusing on both opportunities and challenges. The rapid rise of digital currencies—ranging from Central Bank Digital Currencies (CBDCs) to cryptocurrencies and stablecoins—has significant consequences for African economies, where financial systems are evolving alongside digital innovations. Several African central banks, such as the Central Bank of Nigeria with its eNaira, are experimenting with or researching CBDCs to enhance financial inclusion, improve payment systems, and safeguard monetary sovereignty. This examines how digital currencies may influence key monetary policy transmission mechanisms, including interest rates, credit supply, and exchange rates. While CBDCs could strengthen monetary policy effectiveness by enabling direct monetary interventions and improving policy transmission, they also pose risks, such as disintermediation of the banking sector and challenges to money supply control. Furthermore, the rise of private cryptocurrencies could undermine monetary sovereignty by increasing currency substitution and capital flight risks. This also discusses the financial stability implications of digital currencies, including cybersecurity risks, operational vulnerabilities, and systemic risks arising from crypto-asset markets. It highlights the need for robust regulatory frameworks to manage these risks effectively while ensuring technological innovation is not stifled.In addition to risks, digital currencies offer significant opportunities for African economies, particularly in promoting financial inclusion and reducing cross-border payment costs. Strategic recommendations include phased CBDC implementation, investments in digital infrastructure, strengthened cybersecurity, regulatory reforms, and regional cooperation among African central banks. This concludes that a proactive and collaborative approach is essential for African central banks to harness the benefits of digital currencies while mitigating risks to monetary policy and financial stability. Digital currencies are poised to reshape Africa’s financial landscape, requiring adaptive, forward-looking policy responses.

With the increasing rise of digital currency, the central bank has begun to march into digital currency. This article reviews the research articles on CBDC to gain a deeper understanding of the research content and direction of CBDC. This article aims to review research on central bank digital currencies (CBDCs). Learn about the latest research directions on CBDC and evaluate the practical significance of CBDC and its contribution to the industry. According to the latest research, CBDC is defined as a means of payment equivalent to cash. The advantages and characteristics of using CBDC have also been proposed as the reasons why the central bank should issue them. The article also shows the relationship between CBDC and financial inclusion. Analysis of the current situation and prediction of the future development of CBDC, and some updated measures by regulators after the issuance of CBDC. The report has a certain contribution to what measures should be taken after the issuance of CBDC.

PurposeSeveral terms are interchangeably employed by researchers and practitioners to refer to central bank digital currency (CBDC), resulting in potential mistakes in the CBDC description. This study aims to survey the conceptualization of the CBDC and its utilization context to propose a list of CBDC terminologies.Design/methodology/approachThe research method used is the multivocal literature review, which covers the state-of-the-art with scientific papers and state-of-the-practice with practitioners' reports of the CBDC terminology.FindingsThe finding reveals that the terminologies used to mention a digital currency (DC) issued by a central bank are digital money, official DC, DC, centrally banked cryptocurrencies, digital cash, digital central bank money, CBDCs, central bank-issued cryptocurrency, central bank cryptocurrency, digital fiat currency, central bank-issued digital cash and sovereign digital currencies. The authors who proposed CBDC with distributed ledger technology-based infrastructure named it central bank cryptocurrency, and the others who didn’t specify clearly the infrastructure called it CBDC or another synonym of the DC.Originality/valueWe propose a CBDC concept map to clarify the CBDC understanding, which lists all terminologies found in the literature in a logical structure. The proposed CBDC concept map elucidates the linguistic landscape and clarifies the interpretation nuances across different CBDC terminologies, provides a comprehensive blueprint of the multi-conceptualization nature of CBDCs and contributes with an accessible tool for economists, technologists and lawyer researchers.

Digital currencies are impacting the financial lives of people and countries around the world; particularly developing countries see the retail Central Bank Digital Currencies (CBDCs) as an opportunity to increase financial inclusion and introduce new monetary policy implementation mechanisms. The decision to launch a digital currency mainly depends upon the goals and objectives being set by the Central Bank of any respective country. Digital currencies help to implement monetary policy more effectively to achieve the financial system stability. Kazakhstan is the leading economy in the Commonwealth of Independent States region; the digital payments market is changing rapidly in Kazakhstan, being driven by fintech innovations and public investments in payment technologies. In this article, we thoroughly discussed how launching of “Digital Tenge” is promoting financial inclusion and strengthening the monetary regulations across Kazakhstan. We took the case of Kazakhstan because it’s the first country from Central Asia which took the initiative of launching digital currency, and the National Bank of Kazakhstan has already announced that implementation of “Digital Tenge” would be completed in Kazakhstan by the end of 2025. The implementation of a “Digital Tenge” as a CBDC in Kazakhstan would expand the range of financial services being available to the nation. Having direct authority over the digital currency will empower the National Bank of Kazakhstan to adopt more efficient monetary policy, exerting influence over interest rates, money supply, and general economic stability. Furthermore, by providing digital financial services to marginalized communities, the digital Tenge would also help to solve the difficulties of financial inclusion in Kazakhstan. The article provides the possible policy routes for the governments of developing countries and the financial regulators about adopting CBDCs for promoting financial inclusion and to strengthen the monetary regulations.

The article is devoted to the study of prospects for digital currency issue by central banks as a new form of central bank money and to the potential of their influence on monetary and credit system. The aim of the article is to interpret and classify central bank digital currencies, to identify key characteristics of digital currencies and possible models of their issue, as well as to define the main directions of influence of digital currencies on the monetary and credit and payment systems. The scientific novelty of the article is in the systematization and comparison of different ideas about the implementation of sovereign digital currencies considering the use of distributed registry technologies. The study analyzed the projects of central banks on the issue of digital currencies and identified their features. Possible directions of influence of central bank digital currencies on the monetary and credit policy of the Central Bank and the activities of credit institutions were determined. It revealed that central bank digital currencies can be considered as a new form of money of the Central Bank, which can be issued to be used both in retail and in wholesale payments. Digital currencies may differ in some characteristics. The key ones are: a way to integrate into the monetary and credit system; emission technology; currency storage method; mechanism of mutual settlements and anonymity level. The study showed that the main incentives for introducing digital currencies are the possibility to provide an alternative and universally accessible legal means of payment, as well as to provide faster, more transparent and cheaper in-country and cross-border payments. The influence of digital currencies on the monetary and credit system and the monetary and credit policy of the Central Bank will largely depend on the scenario of their system integration. If cash is simply replaced in circulation by digital currencies, the effect on the Central Bank monetary and credit system and policy will not be significant. However, if central bank digital currencies are issued as an addition to cash, or are in parallel circulation, they can strengthen the transmission mechanism of the monetary and credit policy and increase the centralization of assets on the Central Bank balance sheet, as well as reduce the funding provided by credit institutions.

Between the worldwide digital currencies one can also pinpoint those of central banks being a part of the move towards a cashless society. Several worldwide central banks are already planning to issue them, while others are conducting studies on them. Literature of the topic is heavily increasing, including understanding central bank digital currencies (CBDCs), their risks, and central banks’ future position towards them. This paper analyzes Twitter data tagged with the “cbdc” hashtag and posted between January 2021 and January 2023, with the aim of highlighting the change regarding citizens’ perceptions towards central banks’ digital currencies. The authors extracted 124,946 positive, negative and neutral tweets from Twitter which they further analyzed by using a Python script, in the end highlighting different views on the potential benefits and drawbacks of CBDCs. The results show a growing debate and discussion around the use of CBDCs, with citizens expressing concerns about their potential consequences on civil liberties and financial control, while others highlight the benefits of CBDCs such as financial inclusion and tackling money laundering and terrorism. The paper enriches literature related to the study of consumer sentiment towards digital currencies, highlighting the significance of social media platforms for sharing opinions on emerging financial technologies. Central banks can use social media tools to shift citizens’ sentiments and perspectives, including on topics such as CBDCs, by publishing explainers, replying to comments on relevant topics, and increasing posts’ numbers, as they analyze whether and how CBDCs will be implemented. Research on consumer sentiment on this topic is useful as it can help central banks in adapting their strategies accordingly so that they can better achieve their objectives.

Objectives: This work aims to contribute towards Tanzanian Central Bank Digital Currency (CBDC) users’ privacy preservation. It proposes the design of a privacy preserving CBDC which might be issued by Tanzania's Central Bank (CB), the Bank of Tanzania (BoT), which is currently in CBDC research phase. The work also aims to contribute to literature, the CBDC research being done by BoT, other CBs and CBDC stakeholders around the world. Methods: By using the Design Science Research (DSR) methodology, a privacy preserving CBDC design suitable for Tanzania was proposed, demonstrated and evaluated. This is the result of existing literature showing that different countries have different CBDC designs due to their differences in contexts and purposes for CBDC issuance. This consequently emphasized the fact that a CBDC design should not be treated as a one-size fits all solution. Findings: As opposed to the existing general and other country specific CBDC designs, we proposed a privacy preserving CBDC design suitable for Tanzania by consulting literature and taking into consideration the Tanzanian context. The design appears to be promising Tanzanian CBDC users’ privacy preservation though further work needs to be done. The work should not only be on practical evaluation of the proposed design but also on other factors impacting the success of CBDC projects. This will consequently further increase the success probability of CBDC projects, hence the potential for practical realization of CBDC project benefits. Novelty: Existing literature has shown that, considering the countries’ differences in context and CBDC issuance purposes, CBDC design should not be treated as a generic solution thereby obliging the need for country-specific CBDC designs. Consequently, the privacy preserving CBDC design suitable specifically for Tanzania consists of and provides an outline of privacy preserving interactions among the identified key Tanzanian CBDC participants or actors. The actors are the BoT, the intermediaries (i.e., other banks and payment service providers), Tanzania’s National Identification Authority (NIDA), financial transactions violation detection engine, and the expected CBDC users. Keywords: Digital currency, database privacy, central bank digital currency, privacy

Abstract: This research book, Digital Currencies and Financial Inclusion: Bridging the Gap for Global Empowerment, offers a critical, multidisciplinary analysis of how digital financial technologies—specifically cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs)—can enhance global financial inclusion. Grounded in theories of inclusive finance, development economics, and digital innovation, the work explores the structural barriers that limit access to formal financial systems for marginalized populations, including poverty, informality, institutional exclusion, and digital illiteracy. Employing a comparative framework, the book evaluates case studies from Kenya (M-Pesa), Nigeria (eNaira), China (e-CNY), and El Salvador (Bitcoin), demonstrating the context-specific dynamics that determine digital currency success or failure. Methodologically, it integrates conceptual analysis, empirical evidence, and regulatory review to assess how digital currencies can improve affordability, accessibility, and participation in the financial ecosystem. Key findings highlight that digital currencies can significantly lower transaction costs, facilitate mobile-based financial services, and support programmable financial inclusion tools—such as conditional transfers and microloans—particularly in the Global South. However, challenges remain in regulatory harmonization, infrastructure deployment, and ethical safeguards. The book culminates in a policy–technology–society framework that outlines the prerequisites for building inclusive, secure, and scalable digital currency ecosystems. Its implications extend to central banks, governments, development institutions, and fintech innovators aiming to promote equitable digital financial futures. Keywords Digital currencies, financial inclusion, CBDCs, stablecoins, cryptocurrencies, mobile money, programmable finance, digital wallets, M-Pesa, eNaira, e-CNY, Bitcoin, financial empowerment, regulatory frameworks, infrastructure, AML, KYC, cross-border remittances, digital literacy, inclusive finance, fintech policy, global development.

This paper aims to examine the revolutionary impact of digital technologies—specifically blockchain systems and central bank digital currencies (CBDCs)—on modern financial architecture and the processes of global economic integration. These technologies are rapidly transforming the structure and functioning of both national and international financial systems, placing states, markets, and institutions before new opportunities and challenges within the contemporary economic landscape. Blockchain technology, as one of the core components of Industry 4.0, is widely applied in areas such as peer-to-peer (P2P) transactions, trade finance, smart contracts, digital asset tokenization, and data protection. This research highlights its influence on the functional structure of financial markets, particularly in the context of international payments, transaction transparency, and cybersecurity. Simultaneously, the study explores the evolving role of traditional financial institutions—especially central banks—in the digital age. In Georgia, the emergence of blockchain-based startups in areas like payments, digital contract management, and data security is already evident, positioning this technology as a potential driver of economic transformation in the country. CBDCs, as digital currencies issued by central banks and directed both toward the general public (retail CBDC) and financial institutions (wholesale CBDC), differ from other digital innovations by serving as a strategic instrument that bridges monetary policy, sovereign currency systems, and international financial relations. In addition to blockchain, this study analyzes the potential role of CBDCs in global economic integration—specifically how they support the optimization of cross-border payment systems, increase financial inclusion, and strengthen digital sovereignty, particularly for developing economies. Furthermore, it addresses the geopolitical and regulatory complexities that accompany the global implementation of these technologies. Methodologically, the research employs a mixed-methods approach. The impact of blockchain is evaluated using financial market indicators from Yahoo Finance and Bloomberg, as well as global digital governance indices. The analysis of CBDCs relies on documentary review, including reports from international organizations (e.g., IMF, BIS, World Bank), academic literature, and regulatory frameworks developed by central authorities. The paper is structured as follows: the first section discusses the theoretical and practical aspects of blockchain technology; the second section focuses on the technological and policy foundations of CBDCs; the third section examines their impact on areas such as international trade, financial policy, monetary independence, and cybersecurity. Finally, the case of Georgia is presented as an example of the combined influence of blockchain and CBDCs in an emerging economy. The study’s main conclusion demonstrates that the integration of blockchain and CBDCs is transforming the rules of the game in financial markets. The technological architecture is shifting to a new digital paradigm, where fast, low-cost, and secure transactions are replacing traditional financial intermediaries. Simultaneously, the role of central banks is being strengthened in monetary and credit policy, while their responsibilities regarding cybersecurity and data protection are also expanding. Successful implementation of CBDCs will significantly enhance both domestic financial stability and participation in global monetary relations—provided that international cooperation, legal frameworks, and technical standardization are effectively developed. Similarly, the application of blockchain technology—particularly in Georgia—requires a strategic vision and infrastructure support to harness its potential not only for improving financial products but also for fostering economic development and integration into the global system. Therefore, this paper confirms that the digital technology revolution—namely blockchain and CBDCs—represents not only a technological shift but a profound structural transformation in the global financial architecture, requiring integrated policy approaches and coordinated actions at both national and international levels. Keywords: Blockchain technologies, digital currency, central bank, financial markets, economic integration, Georgian economy, CBDC, international trade, monetary policy.

The development of Central Bank Digital Currencies (CBDCs) has become a significant topic of discussion globally, particularly in emerging markets where financial inclusion, monetary sovereignty, and banking stability are key concerns. This study explores the potential impact of CBDC implementation on the profitability and system stability of commercial banking systems in these economies. This research adopts a qualitative approach through a literature review of CBDC implementations in key emerging economies, including China, Nigeria, Brazil, Russia, and India. The study finds that while CBDCs can enhance efficiency and financial accessibility, their impact varies depending on a country's banking infrastructure, regulatory framework, and financial stability measures. In some cases, CBDCs have exacerbated liquidity risks for commercial banks, while in others, they have promoted digital innovation and alternative revenue streams. The findings highlight the need for strategic collaboration between central banks and commercial financial institutions to mitigate risks while leveraging the benefits of CBDCs. Policy recommendations include implementing limits on CBDC holdings, integrating CBDCs with existing banking services, and fostering regulatory frameworks that support a balanced financial ecosystem. This study contributes to the academic discourse on digital currencies and banking by offering insights into the evolving role of central banks and commercial banks in the digital financial landscape.

The advent of the Central Bank Digital Currencies (CBDCs) marks a turning point in global money. With the rise of digital currencies such as Bitcoin, CBDCs provide a platform for central banks to continue to administer monetary policy while taking part in the digital economy. In this article, we examine the behavioural and macroeconomic effects of CBDCs with regard to how they could affect consumers, national economies and global financial markets. Based on the experimental data and observational findings, the paper considers the effect of CBDCs on the consumers finances (spending and saving), and whether it can overcome such issues as high transaction costs and financial exclusion. It also studies the macroeconomic impact of CBDC adoption, such as inflation, GDP growth and economic activity. The report concludes with policy guidance for central banks and regulators on privacy, security, and financial inclusion as considerations for CBDC design and implementation. The conclusion is that CBDCs can have significant effects but must be designed and used in such a way as to ensure that they do not cause undesirable consequences to personal habits and national economies.

The emergence of Central Bank Digital Currencies (CBDCs) has become a prominent subject of worldwide discourse, especially in emerging nations where financial inclusion, monetary sovereignty, and banking stability are essential issues. This study examines the possible effects of CBDC implementation on the profitability and stability of commercial banking systems in these economies. This study employs a qualitative methodology via a literature evaluation of Central Bank Digital Currency (CBDC) implementations in significant rising economies, namely China, Nigeria, Brazil, Russia, and India. The research indicates that although CBDCs can improve efficiency and financial accessibility, their effects differ based on a nation's banking infrastructure, regulatory environment, and financial stability protocols. In certain instances, CBDCs have intensified liquidity issues for commercial banks, whilst in others, they have fostered digital innovation and other revenue sources. The results underscore the necessity for strategic cooperation between central banks and commercial financial entities to alleviate risks while capitalizing on the advantages of CBDCs. Policy considerations encompass establishing restrictions on CBDC holdings, integrating CBDCs with current banking services, and promoting regulatory frameworks that facilitate a balanced financial environment. This study enhances the scholarly discussion on digital currencies and banking by providing insights into the changing roles of central banks and commercial banks within the digital financial ecosystem.