Impact of Central Bank Digital Currencies on Well-Being and Financial Stability

Central bank digital currencies (CBDCs) are often touted as tools for promoting financial inclusion and global prosperity. However, recent research suggests a different reality. A study analyzing data from 2019 to 2023 found that countries adopting CBDCs experienced declines in well-being, especially among young individuals and those with low incomes. Contrary to expectations, higher-income countries were more likely to pilot or launch CBDCs, with minimal impact on key economic indicators like GDP growth and inflation. Gallup data revealed that CBDC adoption negatively correlated with individuals' thriving and financial well-being, particularly affecting younger and lower-income populations. Countries like South Africa, Sweden, Thailand, and South Korea saw significant declines in well-being post-CBDC adoption. To mitigate risks associated with CBDCs, hybrid models involving private-sector intermediaries and strong privacy protections are recommended. Further research is needed to understand the full impact of CBDC architecture on economic and social outcomes.