“Exploring the Macroeconomic Implications of CBDCs”

Abstract

This dissertation examines the potential macroeconomic implications of CBDC adoption, focusing on monetary policy, financial stability, and economic growth. A comprehensive literature review explores the historical evolution of money and digital currencies, analysing various CBDC models and design choices. The study delves into the potential impacts of CBDCs on monetary policy transmission mechanisms and financial stability, while also considering the technological and operational challenges associated with their implementation. The dissertation provides a detailed analysis of the UK's legislative framework concerning CBDCs, including an overview of current financial legislation, proposed regulatory changes, and the role of the Bank of England. Comparative analyses with other jurisdictions offer a broader perspective on global regulatory approaches. Empirical analysis1 and case studies of CBDC implementations provide practical insights into the real-world implications of these digital currencies. Based on these findings, the dissertation presents policy recommendations for central banks, governments, financial institutions2, and technology providers to effectively navigate the challenges and opportunities presented by CBDCs.