New Forms of Currency in the Digitalized World: Legal Assessment and Challenges

Abstract

 The current digital revolution may result in a radical departure from the traditional model of financial exchange. In recent years, the central bank digital currency (CBDC) has become a policy and operational consideration for central banks, financial ministries and other institutions, due to its ability to respond to long-term and new challenges such as financial inclusion and system stability. This is an important subject of academic research carried out under the doctrine of financial market law. This issue undoubtedly has a growing impact on the practice of financial market functioning and financial and monetary policy decisions. Despite the potential of digital currencies, a lot of challenges remain undiscussed. This paper examines the prerequisites for successful adoption of various forms of digital money and proposes a strategic framework for political decision-making. Subsequently, we studied the impact on the financial system and discussed some challenges and possible solutions. We urge policy makers to be sure of their objectives for adopting the CBDC and to take careful account of the potential unintended impact on the financial system. Overall, the decision to issue the CBDC is a technical choice, and if not the most important, it is also a political decision, which may have important effects on the economic development, citizens’ rights and freedoms and society as a whole.