Digital Public Money and the State: Institutional and Policy Implications of Central Bank Digital Currencies
DOI:
https://doi.org/10.57125/FEL.2026.03.25.04Keywords:
public money, monetary governance, digitalization, payment systems, public finance, state monetary authority.Abstract
The digitalisation of sovereign money through Central Bank Digital Currencies (CBDCs) has become a critical issue for contemporary public finance systems and monetary governance. This study investigates the transformative potential of CBDCs as a specific form of digital public money, positioning them within the analytical framework of public finance rather than considering them merely as technological advances. The research employs a qualitative comparative analysis of central bank reports, legislative initiatives, and policy documents across nine advanced and developing economies in pilot or advanced testing phases, selected for their institutional diversity and relevance to public payment systems, financial inclusion, and legal preparedness. The findings reveal a persistent and significant gap between formal CBDC adoption and actual usage. The Bahamas reports 25% population coverage but only 1% active transactions; China's e-CNY has achieved 8% adoption, yet merely 0.16% sustained daily use; Nigeria's eNaira, despite strong political support, has reached only 0.5% adoption with 1.5% active usage. Analysis of five implemented pilots (eNaira, Sand Dollar, JAM-DEX, e-CNY, DCash) demonstrates consistent underperformance against stated policy objectives, with low institutional trust, strong private sector alternatives, and insufficient digital infrastructure identified as primary constraints. The study categorises five critical risk factors affecting developing economies (infrastructure, adoption, governance, cybersecurity, fiscal over-expectations) compared to three for advanced economies (disintermediation, privacy, marginal benefit). At the same time, the results indicate that CBDCs have the potential to strengthen public payment systems, enhance the effectiveness of monetary policy, and promote financial inclusion, particularly in regions with declining cash usage or limited access to banking services. The findings also reveal potential risks to financial privacy, cybersecurity, and the banking sector's disintermediation that warrant careful policy consideration. The originality of this research lies in its systematic, empirical quantification of the adoption-usage gap across multiple CBDC implementations and in its integration of digital currencies into public finance theory. The practical significance is to provide evidence-based insights for central banks and policymakers designing future monetary systems, demonstrating that successful CBDC implementation requires institutional readiness and policy coherence, not technological sophistication alone.
References
Adrian, T., & Mancini-Griffoli, T. (2021). A new era of digital money. International Monetary Fund. https://www.imf.org/external/pubs/ft/fandd/2021/06/online/digital-money-new-era-adrian-mancini-griffoli.htm
Agur, I., Ari, A., & Dell’Ariccia, G. (2022). Designing central bank digital currencies. Journal of Monetary Economics, 125, 62–79. https://doi.org/10.1016/j.jmoneco.2021.05.002
Allen, S., Čapkun, S., Eyal, I., Fanti, G., Ford, B., Grimmelmann, J., Juels, A., Kostiainen, K., Meiklejohn, S., Miller, A., Prasad, E., Wüst, K., & Zhang, F. (2020). Design choices for central bank digital currency: policy and technical considerations (No. W27634; p. w27634). National Bureau of Economic Research. https://doi.org/10.3386/w27634
Armelius, H., Guibourg, G., Levin, A. T. & Söderberg, G. (2020). The rationale for issuing e-krona in the digital era. Sveriges Riksbank Economic Review, 2, 6–18. https://www.riksbank.se/globalassets/media/rapporter/pov/artiklar/engelska/2020/200618/2020_2-the-rationale-for-issuing-e-krona-in-the-digital-era.pdf
Atlantic Council. (2023). Jamaica’s Jam-Dex: Central bank digital currency tracker. Atlantic Council GeoEconomics Centre. https://www.atlanticcouncil.org/cbdctracker/
Auer, R., & Böhme, R. (2020). The technology of retail central bank digital currency. BIS Quarterly Review. https://www.bis.org/publ/qtrpdf/r_qt2003j.pdf
Auer, R., Cornelli, G., & Frost, J. (2020). Rise of central bank digital currencies: Drivers, approaches and technologies (BIS Working Papers No. 880). https://www.bis.org/publ/work880.htm
Bank for International Settlements. (2021). CBDCs: System design and interoperability.
https://www.bis.org/publ/othp42.htm
Bank for International Settlements. (2023). Blueprint for the future monetary system: improving the old, enabling the new. Annual Economic Report 2023. https://www.bis.org/publ/arpdf/ar2023e3.pdf
Bank for International Settlements. (2023). Central bank digital currencies: A toolkit for policymakers. BIS Annual Economic Report. https://www.bis.org/publ/arpdf/ar2023e.htm
Bank for International Settlements. (2024). Project Helvetia: Settlement of tokenised assets in wholesale central bank money. BIS Innovation Hub. https://www.bis.org/about/bisih/topics/cbdc/helvetia.htm
Bank of England. (2023). The digital pound: Consultation paper. Bank of England & HM Treasury. https://www.bankofengland.co.uk/the-digital-pound
Banque de France. (2022). Wholesale central bank digital currency experiments. Banque de France. https://www.banque-france.fr/en/financial-stability/financial-stability-mandate/supporting-digital-transformation-financial-sector/wholesale-mnbc
Barontini, C., & Holden, H. (2019). Proceeding with caution: A survey on central bank digital currency (BIS Papers No. 101). https://www.bis.org/publ/bppdf/bispap101.pdf
Bindseil, U. (2020). Tiered CBDC and the financial system. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3513422
Bindseil, U., & Panetta, F. (2020). Central bank digital currency remuneration in a world with low or negative nominal interest rates (ECB Occasional Paper No. 247).
Bordo, M., & Levin, A. (2017). Central bank digital currency and the future of monetary policy (No. W23711; p. w23711). National Bureau of Economic Research. https://doi.org/10.3386/w23711
Bossu, W., Itatani, M., Margulis, C., Rossi, A. D. P., Weenink, H., & Yoshinaga, A. (2020). Legal aspects of central bank digital currency: central bank and monetary law considerations. IMF Working Papers, 20(254). https://doi.org/10.5089/9781513561622.001
Brunnermeier, M. K., & Niepelt, D. (2019). On the equivalence of private and public money. Journal of Monetary Economics, 106, 27–41. https://doi.org/10.1016/j.jmoneco.2019.07.004
Central Bank of Nigeria. (2023). eNaira: Progress report. Central Bank of Nigeria. https://www.cbn.gov.ng/Paymentsystem/eNaira/
Central Bank of The Bahamas. (2023). Sand Dollar quarterly economic review. Central Bank of The Bahamas. https://www.centralbankbahamas.com/publications/main-publications/project-sanddollar-a-bahamian-payments-system-modernization-initiative
Chaum, D., Grothoff, C., & Moser, T. (2021). How to issue a central bank digital currency (SNB Working Paper No. 3/2021). https://www.snb.ch/en/mmr/papers/id/working_paper_2021_03
Davlatov, E., & Sági, J. (2025). The transmission mechanism of monetary policy and central bank digital currency: a new monetary order? Journal of Central Banking Theory and Practice, 14(1), 95–119. https://doi.org/10.2478/jcbtp-2025-0006
Demirgüç-Kunt, A., Klapper, L., Singer, D., & Ansar, S. (2022). The Global Findex Database 2021: Financial Inclusion, Digital Payments, and Resilience in the Age of COVID-19. The World Bank. https://doi.org/10.1596/978-1-4648-1897-4
European Central Bank. (2019). Exploring anonymity in central bank digital currencies (ECB Paper IN FOCUS, Issue No. 4). https://www.ecb.europa.eu/press/intro/publications/pdf/ecb.mipinfocus191217.en.pdf
European Central Bank. (2020). Report on a digital euro.
https://www.ecb.europa.eu/pub/pdf/other/Report_on_a_digital_euro~4d7268b458.en.pdf
Fan, R., Walker, T. B., & Wright, A. (2025). Central bank digital currency in small open economies. Latin American Journal of Central Banking, 6(2), Article 100151. https://doi.org/10.1016/j.latcb.2024.100151
Fernández-Villaverde, J., Sanches, D., Schilling, L., & Uhlig, H. (2021). Central bank digital currency: Central banking for all? Review of Economic Dynamics, 41, 225–242. https://doi.org/10.1016/j.red.2020.12.004
Infante, S., Kim, K., Orlik, A., Silva, A. F., & Tetlow, R. (2024). Retail CBDC: implications for banking and financial stability. Annual Review of Financial Economics, 16(1), 207–232. https://doi.org/10.1146/annurev-financial-082123-105958
International Monetary Fund. (2023). Central bank digital currency global developments report. https://www.imf.org/en/Publications/fintech-notes
International Monetary Fund. (2024). China: Financial sector assessment program-Technical note on digital money. IMF Country Report. https://www.imf.org/en/Countries/CHN
Kahn, C., Singh, M., & Alwazir, J. (2022). Digital money and central bank operations (IMF Working Paper No. 22/85). https://www.imf.org/en/-/media/files/publications/wp/2022/english/wpiea2022085-print-pdf.pdf
Kiff, J., Alwazir, J., Davidovic, S., Farias, A., Khan, A., Khiaonarong, T., Malaika, M., Monroe, H., Sugimoto, N., Tourpe, H., & Zhou, P. (2020). A survey of research on retail central bank digital currency. IMF Working Papers, 20(104). https://doi.org/10.5089/9781513547787.001
Kumhof, M., & Noone, C. (2018). Central bank digital currencies—design principles and balance sheet implications. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3180713
Lagarde, C. (2020). The future of money – innovating while retaining trust. European Central Bank. https://www.ecb.europa.eu/press/inter/date/2020/html/ecb.in201130~ce64cb35a3.en.html
Mancini Griffoli, T., Agur, I., Ari, A., & Martinez Peria, M. (2018). Casting Light on Central Bank Digital Currencies. International Monetary Fund. https://doi.org/10.5089/9781484384572.006
Niepelt, D. (2020). Monetary policy with reserves and CBDC: optimality, equivalence and politics. CEPR. https://cepr.org/publications/dp15457
OECD. (2023). Central Bank Digital Currencies (CBDCs) and democratic values. OECD Business and Finance Policy Papers, OECD Publishing, Paris. https://doi.org/10.1787/f3e70f1f-en.
Opare, E. A., & Kim, K. (2020). A compendium of practices for central bank digital currencies for multinational financial infrastructures. IEEE Access, 8, 110810–110847. https://doi.org/10.1109/ACCESS.2020.3001970
Ozili, P. K. (2022). Digital financial inclusion. In K. Sood, R. K. Dhanaraj, B. Balusamy, S. Grima, & R. Uma Maheshwari (Eds), Big Data: A Game Changer for Insurance Industry (pp. 229–238). Emerald Publishing Limited. https://doi.org/10.1108/978-1-80262-605-620221015
Reserve Bank of India. (2023). Concept note on central bank digital currency. Reserve Bank of India. https://www.rbi.org.in/scripts/PublicationReportDetails.aspx
Sveriges Riksbank. (2020). E-krona pilot report. https://www.riksbank.se/en-gb/payments--cash/e-krona/
Swiss National Bank. (2023). Project Helvetia III: Wholesale CBDC settlement. Swiss National Bank Quarterly Bulletin. https://www.snb.ch/en/the-snb/mandates-goals/payment-transactions/projekt_helvetia
Umar, M. (2025). Does CBDC launch increase tax collection? Empirical evidence from China. Finance Research Letters, 71, Article 106486. https://doi.org/10.1016/j.frl.2024.106486
World Bank. (2021). Central bank digital currencies for cross-border payments: A roadmap. https://documents1.worldbank.org/curated/en/369001638871862939/pdf/Central-Bank-Digital-Currencies-for-Cross-border-Payments-A-Review-of-Current-Experiments-and-Ideas.pdf
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 authors
This work is licensed under a Creative Commons Attribution 4.0 International License.
