BANKING DIGITIZATION AND CENTRAL BANK DIGITAL CURRENCY PROJECTS, IMPLICATIONS FOR MONETARY POLICY AND FINANCIAL STABILITY

Abstract
The accelerated digital transformations of the last decade have prompted central banks to rethink their role in
the modern economy, leading to the development of digital currencies (CBDCs). This paper analyzes how CBDC
projects contribute to reshaping the traditional functions of central banks, with a focus on monetary policy and
financial stability. In the context of mounting pressures from cryptocurrencies, declining cash usage, and the need to
modernize payment infrastructure, central bank digital currencies (CBDCs) are regarded as a strategic solution for
strengthening monetary sovereignty and enhancing the efficacy of monetary policy transmission. The primary objective
of this paper is to provide a comparative analysis of CBDC projects that are in advanced stages of development in
China, Japan, the United States, the eurozone, and the United Kingdom. The analysis will emphasize the differences in
approach, the anticipated impact on the financial system, and the geopolitical implications. The research is grounded
in a qualitative method, employing case studies and comparative analysis, with data collected from secondary sources,
including academic articles and official central bank documents. The findings indicate that, despite the shared
objectives of the projects—namely, modernizing the payment system, supporting financial inclusion, and strengthening
monetary policy—the architecture, degree of centralization, and pace of implementation vary across economies. The
paper adds value by linking the technological design of CBDCs to their impact on financial intermediation and
macroeconomic stability, providing a clear perspective on the implications of these monetary innovations at the global
level.