Creative Approaches Towards Development of Computing and Multidisciplinary IT Solutions for Society

27Analysis of the Preconditions for the Introduction of a Central Bank Digital Currency and Some Recommendations for Central Banks

Phuong Anh Pham^1*, Nhat Minh Nguyen¹ and Thi Minh Trang Nguyen²

¹Banking Academy of Vietnam, Hanoi, Vietnam

²National Economics University, Hanoi, Vietnam

Abstract

Under the Industrial Age 4.0, digital currencies and related transactions have deeply penetrated aspects of socio-economic life. The rapid evolution of the global digital currency system has left governments confused in their efforts to adapt to changes in spending and investment behaviors. Under such circumstances, the majority of central banks worldwide have been actively involved in research or pilot projects for the adoption of a central bank digital currency (CBDC). Based on global practices in CBDC development and adoption, this study seeks to identify and analyze the high-level environmental preconditions that support a general-purpose CBDC. We find that the following preconditions must be met before a CBDC can be broadly accepted and adopted: (i) clear policy objectives, (ii) broad stakeholder support, (iii) a sound legislative framework, (iv) robust technology, and (v) market readiness. Crucially, these prerequisites must be closely linked and synchronized so that the advent of this digital currency can promote the development of other related sectors.

Keywords: Digital currency, central bank digital currency, monetary policy, blockchain, central banks

27.1 Introduction

Money ...