Central Bank Digital Currencies and institutional systems: Design choices based on institutional characteristics

A Central Bank Digital Currency (CBDC) is a state-issued digital currency. Most CBDCs are expected to be based on blockchain technology, delivering programmable digital money that is purportedly more efficient than the current fiat money systems and streamlining international business transactions. This study offers a typology of 49 countries for a better understanding of the relationship between political, social and economic factors and CBDC design choices. We contrast two case studies, USA and China, and suggest that varying levels of rule of law, GDP per capita, international trade, CBDC development, citizen trust, freedom, and financial literacy influence decision-making on CBDC design choice. This is the first study that provides the key institutional drivers affecting the development of CBDCs and an institutional systems typology based on countries’ design of CBDCs.