"Introducing a new index of central bank digital currency development"

Abstract

"This study constructs a new index to measure global central bank digital currency (CBDC) development by systematically tracking project progress from 2014 to 2025 across the central banks of 97countries plus the European Central Bank. Two versions of the index—simple-weighted and GDP-weighted—reveal significant acceleration in global CBDC development between 2017 and 2023. Empirical analysis reveals Granger causality between these development measures and several key financial indicators, including an existing CBDC uncertainty index, global cryptocurrency market metrics (trading volume and market capitalization), and the price dynamics, volatility, and liquidity of major cryptocurrencies. Furthermore, the estimations identify long-term relationships with these variables. The results indicate that the development of CBDC projects, reflected in our new development indices, has a positive long-term influence on the CBDC uncertainty index and the trading activity and market capitalization of the global cryptocurrency market (i.e., Bitcoin, Doge, Ethereum, Litecoin, Monero, Stellar, Tether, and XRP). Conversely, advancing CBDC development is associated with a long-term mitigating effect on price volatility for the majority of these digital assets. Collectively, these findings suggest that central bank digital currency initiatives represent a significant factor influencing the evolution and stability of broader digital asset markets. © The Author(s), under exclusive licence to Springer Nature B.V. 2025."