Development of Central Bank Digital Currencies: The review of Contemporary Trends and Perspectives in Central Banking

Abstract

This paper examines how Central Bank Digital Currencies (CBDCs) are being developed today, looking at the reasons central banks are interested in them and the challenges involved in making them a reality. By analyzing case studies from around the world and recent academic insights, the paper identifies key economic, technological, and policy-driven factors encouraging CBDC adoption. It highlights the promise CBDCs have for improving monetary policy effectiveness, making payment systems faster and cheaper, and increasing financial inclusion. At the same time, it acknowledges significant risks, such as the possibility of weakening traditional banks, concerns about user privacy, and threats from cyberattacks. Through comparing different global CBDC projects, such as China’s digital yuan (e-CNY) and the Bahamas’ Sand Dollar, the paper demonstrates how each country's unique priorities and technological readiness shape their approaches to CBDCs. It underscores the need for clear regulations, seamless integration between systems, and cooperation across borders to ensure CBDCs are safe and effective. The paper also provides recommendations for future policy-making and research to support well-informed decisions in this fast-changing area.