Unveiling the influencing mechanism underlying users’ adoption and recommend intentions of central bank digital currency: A behavioral reasoning theory perspective

<abstract> <p>Central Bank Digital Currencies (CBDC) are being researched in academia and piloted by central banks around the world. Initial research highlights the importance of privacy concerns on adoption intention in CBDC. We took one step further and investigated the link between privacy concerns and adoption using the Chinese CBDC and digitalized version of the Yuan, the e-CNY. We integrated and applied the established Antecedent Privacy Concerns and Outcomes (APCO) model with the Task-Technology Fit model in a quantitative online-questionnaire with 682 Chinese participants to study the influence of privacy concerns on CBDC usage. The data was analyzed using partial least squares structural equation modeling (PLS-SEM) to identify significant path coefficients and effects in the developed model. The findings demonstrated that several antecedents significantly influenced privacy concerns, which in turn influenced e-CNY usage. In particular, perceived vulnerabilities impacted privacy concerns, while soft and hart trust factors were found to neither impact concerns or usage. When compared to prior research, the distinction between intention to use and usage of CBDC, under consideration of privacy concerns, seemed to be negligible. The often discussed 'privacy-paradox' could not be observed for CBDC. Observed differences in antecedents and other factors may have been due to cultural, political, and demographic factors, as well as different CBDC design choices. For practitioners, the results further emphasized the need for a privacy-friendly implementation of retail CBDC, which efficiently communicated user benefits while rebutting perceived vulnerabilities.</p> </abstract>

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

Background and Purpose: As central banks globally explore the implementation of Central Bank Digital Currencies (CBDC), India has initiated a phased rollout of its Digital Rupee. While technological and regulatory dimensions of CBDC have received attention, empirical understanding of its perceived impact on monetary policy transmission remains limited. This study aims to evaluate public awareness, usage patterns, and perceptions of the Digital Rupee, with a focus on implications for India's monetary policy framework. Methods: A cross-sectional, quantitative survey was conducted among 320 Indian adults using a structured online questionnaire. The instrument measured CBDC awareness, adoption intent, perceived benefits, risks (including policy transmission, disintermediation, financial inclusion, and privacy), and views on key technological features. Descriptive statistics, ANOVA, and Partial Least Squares Structural Equation Modeling (PLS-SEM) were used for analysis. Results: Our findings revealed that respondents exhibited high awareness of the Digital Rupee (85%) but limited direct pilot usage (28%). They strongly supported using CBDC for faster and more targeted fiscal transfers (mean = 5.2/7) and endorsed key features such as offline capability (mean = 6.1) and programmability (mean = 5.8). However, concerns about potential bank disintermediation (mean = 4.8) and systemic stability risks (mean = 4.5) were also prominent. Views on cross-border use and legal safeguards indicated moderate interest alongside notable knowledge gaps. Discussion: The study highlights both the enthusiasm and reservations surrounding CBDC adoption in India. Key insights include the need for seamless UPI integration, tiered wallet caps, and public trust mechanisms to preserve financial stability. Strategic policy design balancing innovation with inclusion and privacy is essential to ensure the Digital Rupee complements India’s existing monetary tools without destabilizing its banking ecosystem.

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

Central bank digital currencies (CBDC) have been implemented by some countries and trialled by many more. The consumer has an increasing range of financial services to choose from including decentralised blockchain-based cryptocurrencies. A CBDC may use blockchain technology, but it is centralized, so the institutions that support it play an important role. Despite the centralised top-down nature of this financial technology, it still needs to be adopted so the consumer’s perspective, particularly their trust in it, is very important. Each CBDC implementation can be different, and each country’s context can be different, therefore it is important to understand each case separately. This research models the Brazilian consumer’s trust in their two-tier CBDC, where the central bank and the retail banks retain their current role. The six ways to build trust in a CBDC, identified by previous research in a different region, are supported for this case also. These are: (a) Trust in government and central bank offering the CBDC, (b) expressed guarantees for those using it, (c) the favourable reputation of other active CBDCs, (d) the CBDC technology, the automation and limited human involvement necessary, (e) the trust building features of the retail bank’s CBDC wallet app, and (f) the privacy features of the retail bank’s CBDC wallet app and back-end processes.

Introduction/Main Objectives: Central Bank Digital Currency (CBDC) is an electronic form of banknotes, but different from virtual currency or cryptocurrency which are not issued by the state, the CBDC issued and guaranteed by the central bank. The aim of this study is to investigate the impacts of CBDC on financial stability using a Vector Auto-regressive model. The endogenous variables in the VAR estimation contain the Central Bank Digital Currency Attention Index (CBDCA), composite stock price index, real exchange rate, and interest rate (BI7DRR). Background Problems: The presence of CBDC will change the objective of Bank Indonesia and influence the structure of the monetary policy, which is no longer focused on achieving a low and stable inflation rate but on achieving price stability. Novelty: Although CBDCs will be launched worldwide, there are a limited number of empirical studies that have analyzed their impact on financial stability, especially for the case study in Indonesia. In this paper, we also use the Vector Error Correction Model (VECM) model with stochastic volatility and Impulse Response Function to make a forecast and see the impacts of shocks on the financial variables. Research Methods: In this study, we used monthly time series data from January 2019 – January 2023. In order to find the correlation between CBDC and the financial market we used the Granger causality model and impulse response function analysis. Finding/Results: The results of this study prove that CBDC has a positive correlation with the real exchange rate, and financial markets such as stock or bond prices have a positive response to shocks in CBDC. Conclusion: In this study, we used monthly time series data from January 2019 – January 2023. We use empirical tests to examine the CBDC attention index in relation to index attention, exchange rates, interest rates and IHSG. Our empirical results show that in Granger causality there is no causal relationship between CBDC and other macroeconomic variables. whereas in the IRF analysis, the response to the CBDC shock tends to be stagnant, the FEVD results show short-term and long-term shock fluctuations in the CBDC and other variables. These results indicate that CBDC does not have a significant effect on the macroeconomic variables used as indicators of financial system stability, but on the contrary, people's attention to CBDC depends on the condition of the variables in the financial system. On the other hand, the development of CBDC depends on economic conditions. The uncertainty surrounding CBDC plays an important role in indicating that the introduction of CBDC brings significant changes to the economy.

Central Bank Digital Currencies - Design Principles and Balance Sheet Implications

An overview of the definitions of central bank digital currency (CBDC), formulated by researchers of the International Monetary Fund (IMF), the Bank for International Settlements (BIS), the Bank of England, is presented, and the essence of the CBDC is revealed. It is stated that the existing electronic money is a digital form of obligations of financial intermediaries, and CBDC is a form of emission and obligations of central banks. The types and forms of CBDC are generalized, namely: retail or wholesale, account-based or token-based ones. The structure and functionality of the register, payment authentication, access to infrastructure, and governance are defined as factors taken into account during CBDC designing. Similar models of launching national CBDC by the Bank of England (economy-wide access or financial institutions access, and financial institutions plus CBDC backed narrow bank access) and BIS (direct, indirect, hybrid) are under consideration. The synthetic CBDCs are marked as a theoretical concept of CBDC. The overview of projects of the People's Bank of China – "e-renminbi", the Central Bank of the Uruguay – "e-peso", the Central Bank of the Bahamas – "sand dollar" and the Eastern Caribbean Central Bank affirm the interest of developing countries in launching national retail CBDCs. It was found that apart from the Riksbank with the successful "e-krona" project, most of the monetary authorities of developed countries (BIS, Bank of Japan, Bank of Canada, Deutsche Bank, FRS) are just planning or starting to experiment with the issuance of digital securities, which demonstrates their concern about the restructuring of the banking system and the changes of global role of traditional currencies. Among the positive consequences of the introduction of CBDC for the domestic banking system are the emergence of an alternative payment instrument, the implementation of effective monetary policy through increased influence on interest rates, and regulation of the legal regime of crypto currencies. At the same time, the introduction of CBDC involves certain changes in financial intermediation (replacement of the deposits of commercial banks with the CBDC, the performance of functions inherent to commercial banks by the central bank or fintech companies), and will require powerful technical capabilities, including those related to protection from cyber risks. The results of the study point to the need for a cautious approach to the implementation of the Ukrainian CBDC only after the NBU assesses the public demand for new forms of money and the impact of the launch of CBDC models on price and financial stability, and compares available payment technologies that can achieve the same goals as the CBDC.

An overview of the definitions of central bank digital currency (CBDC), formulated by researchers of the International Monetary Fund (IMF), the Bank for International Settlements (BIS), the Bank of England, is presented, and the essence of the CBDC is revealed. It is stated that the existing electronic money is a digital form of obligations of financial intermediaries, and CBDC is a form of emission and obligations of central banks. The types and forms of CBDC are generalized, namely: retail or wholesale, account-based or token-based ones. The structure and functionality of the register, payment authentication, access to infrastructure, and governance are defined as factors taken into account during CBDC designing. Similar models of launching national CBDC by the Bank of England (economy-wide access or financial institutions access, and financial institutions plus CBDC backed narrow bank access) and BIS (direct, indirect, hybrid) are under consideration. The synthetic CBDCs are marked as a theoretical concept of CBDC. The overview of projects of the People's Bank of China – "e-renminbi", the Central Bank of the Uruguay – "e-peso", the Central Bank of the Bahamas – "sand dollar" and the Eastern Caribbean Central Bank affirm the interest of developing countries in launching national retail CBDCs. It was found that apart from the Riksbank with the successful "e-krona" project, most of the monetary authorities of developed countries (BIS, Bank of Japan, Bank of Canada, Deutsche Bank, FRS) are just planning or starting to experiment with the issuance of digital securities, which demonstrates their concern about the restructuring of the banking system and the changes of global role of traditional currencies. Among the positive consequences of the introduction of CBDC for the domestic banking system are the emergence of an alternative payment instrument, the implementation of effective monetary policy through increased influence on interest rates, and regulation of the legal regime of crypto currencies. At the same time, the introduction of CBDC involves certain changes in financial intermediation (replacement of the deposits of commercial banks with the CBDC, the performance of functions inherent to commercial banks by the central bank or fintech companies), and will require powerful technical capabilities, including those related to protection from cyber risks. The results of the study point to the need for a cautious approach to the implementation of the Ukrainian CBDC only after the NBU assesses the public demand for new forms of money and the impact of the launch of CBDC models on price and financial stability, and compares available payment technologies that can achieve the same goals as the CBDC.

We build models with an interest-bearing central bank digital currency (CBDC) to investigate whether the interest-bearing CBDC can lead to financial disintermediation. In the benchmark model with only CBDC, entrepreneurs can deposit their idle CBDC and banks can hold CBDC to satisfy the reserve requirement. CBDC and bank deposits become complements. A higher CBDC interest rate always promotes investment and may or may not reduce bank lending, because the higher return on CBDC encourages entrepreneurs to accumulate more CBDC and deposit more. More deposits could in turn lead to more bank lending. The interest rate on reserves and the reserve requirement ratio can be effective policy tools that affect bank lending and investment. We consider extensions where cash and interest-bearing CBDC can coexist. The coexistence may require the central bank to adjust the CBDC interest rate or the interest rate on reserves. Our results suggest that the relationship between CBDC and bank deposits are crucial for understanding the effects of CBDC on banking and the macroeconomy.

Central bank digital currencies — Design principles for financial stability

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.

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

European Central Bank Digital Currency: The Digital Euro. What Design of the Digital Euro Is Possible Within the European Central Bank’s Legal Framework?

Floating interest Central Bank Digital Currency (CBDC) is a moderately risky financial asset. Given the risks involved and the returns attached, a rational investor has to determine the optimal allocation of wealth to the CBDC in his or her portfolio. The paper sought to establish the optimal wealth allocation to a floating interest rate CBDC and a risk-free asset. The study adopted an analytical design to illustrate the theoretical optimal holding of floating interest rate CBDC by individual investors based on Merton's 1969 mathematical model. Using data collected from the Central Bank of Kenya and Kenya National Bureau of Statistics, the paper applied the Merton model to a hypothetical proxy for CBDC, and real-world data on inflation, interest, and 91-day T-bill, to allocate investors' wealth to floating interest CBDC and a risk-free asset. The results show that optimal wealth allocation to floating interest rate CBDC was a function of the risk premium, the degree of investor risk aversion and the volatility of the floating interest rate CBDC. The results further demonstrate that whenever CBDC offered a higher interest rate than a risk-free asset, investors would shift wealth to CBDC and vice versa. Further, whenever the volatility on CBDC returns increased, investors tended to hold fewer units of interest-bearing CBDCs and more of risk-free assets and vice versa. The optimal monthly consumption for the risk-averse investor was a function of subjective discounting rate, degree of investor risk aversion and previous wealth. A higher subjective discounting rate or a higher cumulative wealth, or a lower risk aversion was associated with increased optimal consumption, <i>ceteris paribus</i>, and vice versa is true. Our results therefore suggest that financial markets investment portfolios are sensitive to CBDC volatility, and this that can originate another strand of CBDCs literature. These findings provide useful insights to individual and institutional investors, and can guide policymakers and financial market regulators on the important link between CBDC and financial markets in the new digital-currency era. For example, policymakers and regulators can adjust fiscal and monetary policy by considering the possible impact on investor portfolios. This can guide investors to strategically adjust their portfolio positions.