The economic impact of digital money

The impact of digital money, such as tokenised deposits, stablecoins and central bank digital currencies, (CBDCs) on our economies is a subject of increasing academic interest and practical exploration. These digital forms of currency offer transformative possibilities for financial systems worldwide, promising increased efficiency, broader financial inclusion and spurring innovation. Still, there are mixed views, with some claiming that digital money will positively impact our lives whilst other researchers are more sceptical. Digital currencies can significantly streamline payment processes, reducing both time and cost associated with traditional banking systems, and this efficiency is particularly beneficial for cross-border transactions which are often slow and expensive. By lowering transaction costs and time, businesses can operate more efficiently, so encouraging trade and economic activity. Research from the Bank for International Settlements (BIS) highlights that CBDCs could …