The Current Landscape of CBDCs and the Scope of Monetary Policies Under Digitalized Macroeconomic Systems

The emergence of central bank digital currencies has triggered debates about monetary policy and monetary transmission mechanisms. The role of central banks and other actors, the policies to be implemented, and the approaches to be prioritized all imply trade-offs. The aim of this chapter is to discuss the effectiveness of monetary policy and monetary transmission mechanisms in different scenarios with different degrees of digitalization, as well as the implications for monetary policy with different degrees of transparency from a technical point of view. The role of central banks, the banking sector and other stakeholders will be assessed with a focus on possible economic outcomes under different economic conditions. Given the need for cooperation, technical and legal compatibility, and transparency in the introduction of digital currencies at the national and international levels, a roadmap and possible solutions to problems that may arise are crucial. The chapter discusses the efficiency of central bank digital currencies along with monetary policy under different scenarios and deviations from the conventional framework, focusing on the importance of network security and data security preserved in the economic system, along with technical, economic and legal obstacles that may appear in the decision-making processes of the relevant authorities, while suggesting ways to improve transparency and the perception of monetary policy neutrality.

Keywords: Monetary Policy, Blockchain, Cryptocurrencies, Central Bank Digital Currencies

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Blockchain: Concepts, Issues, and Applications

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The Current Landscape of CBDCs and the Scope of Monetary Policies Under Digitalized Macroeconomic Systems

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