The Relationship Between the Development of Central Bank Digital Currencies and Cryptocurrencies

Abstract

Following the 2008 financial crisis, cryptocurrencies have brought significant innovations to the financial system and created an important test for central banks. Adopted by users in a short period of time and traded in high volumes, cryptocurrencies have a more liberal paradigm than the current financial system. Central banks have initiated studies on CBDCs in order to prevent the risks posed by cryptocurrencies and to take advantage of the opportunities created. Therefore, the development of CBDCs, which are characterized as the turning point of the financial system, is associated with the risks and opportunities created by cryptocurrencies. In this sense, this study aims to evaluate the risks and opportunities in the current situation by first addressing the relationship between the development process of CBDCs and cryptocurrencies. In addition, the study also aims to contribute to the development of CBDCs and literature by theoretically analyzing the possibilities that may occur in the future.