Should Central Banks Issue Digital Currency?

Abstract

Central Bank Digital Currency (CBDC) is considered a potential advancement in the evolution of money, offering a more stable unit of account, efficient medium of exchange, and secure value storage. However, despite gaining attention from scholars and practitioners in recent years, plenty of questions on how central banks can effectively develop CBDCs and their potential impact on a country's existing financial system remain uncertain. This paper employs a combination of text mining and systematic review methods to comprehensively analyze academic papers on CBDC. Its aim is to pinpoint key research issues and knowledge gaps that warrant future exploration. We find six primary research themes connected to CBDC, including 1- CBDC issuance 2-CBDC and compatibility, 3- CBDC and monetary policy, 4- CBDC and financial stability, 5- CBDC and payment system 6- CBDC and privacy and security. The findings help provide both overall and in-depth views of the current state of research in digital fiat currency topics, as well as drawing some important implications and suggestions on directions for the future research.