New research indicates that in countries where central bank digital currencies have been adopted or are under consideration, well-being is low.
We’re often told that central bank digital currencies (CBDCs) will promote "financial inclusion" and help people around the globe. However, preliminary research results indicate the opposite could be true: Where CBDCs have been adopted, well-being has declined in recent years — particularly among young people and those with low incomes.
My new research paper provides the first comprehensive evaluation of their early effects on macroeconomic indicators and subjective well-being, utilizing cross-country data between 2019 and 2023. The results suggest that the benefits may be more limited than initially anticipated, coupled with potential negative effects on individual well-being and financial stability.
Data from the World Bank indicates — contrary to what you may think — higher-income countries are more likely to pilot or launch CBDCs, with these countries having, on average, five percentage points higher per capita GDP. While these countries also tend to have larger populations — largely driven by China and India — there are no significant differences in net migration rates, male unemployment rates, or urban populations.
