The development of central bank digital currencies : why central banks are developing their own central bank digital currencies?

Abstract

Development of digitalization is inevitable, and the popularity of cash is declining. Digitalization, however, brings many challenges in terms of payment methods. One future currency we may use on a large scale is the Central Bank Digital Currency.

This thesis aims to determine why Central Bank Digital Currencies are needed and what issues must be considered when planning and launching them. The thesis also examines questions related to the topic, such as benefits, risks, and superficially associated safety. We started the thesis in May 2022.

The thesis has a theoretical background that examines the subject's current state. The theory part reviews definitions and limitations related to money and its history, central bank operations, and digital currencies. The section also examines the research questions, interviewees, and thesis methods. The thesis interviewed developers and administrators of different public administration online services from other job titles. The purpose is to find out from the interviewees how exactly they see development of central bank digital currencies and what issues have been taken into account when it is being developed.

The research results examine and analyse the interview results and compare the results between different financial institutions. We use the theoretical background section to help analyse the studies, which is a reasonable basis for examining the results.

Finally, we make the final reflections and summary of the thesis.