Central Bank Digital Currencies: A New Era in Macroeconomics?

In 2025, Central Bank Digital Currencies (CBDCs) are reshaping the global financial landscape, prompting intense debate about their macroeconomic implications. Unlike cryptocurrencies, CBDCs are digital liabilities issued by central banks, designed to function as a secure, efficient medium of exchange. As over 100 central banks explore or pilot CBDCs, their impact on monetary policy, economic growth, inflation, and financial stability is under scrutiny. This article examines how CBDCs influence key macroeconomic indicators, drawing on data and insights from global implementations.

The Rise of CBDCs: A Global Perspective

By May 2025, 93% of central banks are researching CBDCs, with 58% likely to issue a retail CBDC in the near term, according to a 2022 Bank for International Settlements survey. Countries like Nigeria, China, and the Eastern Caribbean Currency Union have launched CBDCs, while the European Central Bank is in a two-year preparation phase for the digital euro (November 2023–October 2025). These initiatives aim to modernize payment systems, enhance financial inclusion, and counter private digital currencies. However, CBDCs introduce complexities that affect macroeconomic stability.

Impact on Monetary Policy

CBDCs influence monetary policy through their effects on money velocity, bank deposits, and reserve volatility. A 2023 International Monetary Fund (IMF) study highlights that unremunerated or wholesale CBDCs do not alter monetary policy objectives but can disrupt retail and cross-border payments. For instance, CBDCs may increase money velocity by facilitating faster transactions, potentially amplifying inflationary pressures. In Nigeria, the eNaira’s launch in 2021 led to a significant rise in inflation post-issuance, though it also boosted economic growth in sectors like finance and agriculture.

In monetary-targeting regimes, CBDCs can destabilize the relationship between base money (M0) and broader money aggregates, complicating inflation control. The IMF notes that digitalization, as seen with M-Pesa in Kenya, has reduced the cash-to-GDP ratio and increased the money multiplier, suggesting similar risks for CBDCs. To mitigate these, central banks are experimenting with design features like holding caps and non-remunerated structures, as seen in the digital euro’s “waterfall functionality.”

Economic Growth and Financial Stability

CBDCs can stimulate economic growth by reducing transaction costs and fostering innovation. A 2024 study on Nigeria’s eNaira found that its issuance positively impacted GDP, particularly in the financial, agricultural, and manufacturing sectors, with transactions worth ₦8 billion (US$18.2 million) by 2022. Similarly, a Bank of England model suggests that issuing CBDCs equivalent to 30% of GDP could raise GDP by 3% permanently by lowering real interest rates and transaction costs.

However, CBDCs pose risks to financial stability. By competing with bank deposits, CBDCs may cause disintermediation, reducing banks’ lending capacity. The IMF warns that countries with banking systems reliant on small retail deposits and weak digital payment infrastructures are most vulnerable. To address this, central banks like the People’s Bank of China impose limits on CBDC holdings to prevent sudden deposit outflows, balancing growth with stability.

Inflation Dynamics

The relationship between CBDCs and inflation is complex. A 2024 study in the Journal of Money and Business found that Nigeria’s non-interest-bearing eNaira increased inflation, likely due to higher money velocity and reduced transaction costs. Conversely, a ScienceDirect analysis using historical velocity data suggests that CBDCs need not impair inflation control if designed with appropriate policy rules, such as McCallum’s money supply growth framework. In China, the digital yuan’s pilot has encouraged green bond issuance, indirectly stabilizing prices by promoting sustainable investments.

Sustainability and Green Finance

CBDCs are increasingly linked to sustainability goals. China’s digital yuan pilot, for example, has reduced SO2 emissions and supported green land development by channeling funds into environmentally friendly projects. A 2024 systematic review notes that CBDCs can accelerate green finance, enhancing macroeconomic stability through sustainable growth. This aligns with global trends toward digitization and energy efficiency, though blockchain-based CBDCs raise concerns about energy consumption, necessitating careful design.

Challenges to Adoption

Despite their potential, CBDC adoption remains slow. A 2024 IMF Fintech Note cites challenges like low public awareness, preference for existing payment systems, and insufficient incentives for intermediaries. In Nigeria, despite 800,000 eNaira wallet downloads by 2022, concerns persist about its usefulness compared to bank-owned payment channels. The IMF’s REDI Framework emphasizes regulatory strategies, education, and incentives to boost adoption, critical for realizing macroeconomic benefits.

Data on CBDC Implementation and Macroeconomic Impact

The table below summarizes the macroeconomic impacts observed in select CBDC implementations as of 2025.

Future Outlook for CBDCs

As CBDCs evolve, their macroeconomic impact will depend on design choices and policy frameworks. Interest-bearing CBDCs could enhance monetary policy tools, as suggested by a Bank of Canada study, but risk depressing bank credit. Non-remunerated designs, prevalent in current pilots, minimize financial disruption but may limit adoption. Cross-border dimensions, such as the digital euro’s potential to challenge the US dollar’s reserve status, remain unresolved and require further research.

In 2025, central banks must balance innovation with stability. By leveraging blockchain for efficiency while addressing privacy and energy concerns, CBDCs could usher in a new era of macroeconomics—one where digital currencies enhance growth, inclusion, and sustainability without undermining monetary control.

Sources

• Title: Central Bank Digital Currency
  URL: https://www.federalreserve.gov/central-bank-digital-currency.htm
  Description: A Federal Reserve page detailing its exploration of CBDCs, focusing on potential benefits and risks for the U.S. payment system.
• Title: The digital pound
  URL: https://www.bankofengland.co.uk/the-digital-pound
  Description: A Bank of England resource on the digital pound, outlining its potential design, privacy considerations, and consultation process.