Digital currencies force central banks into hard choices over privacy and bank stability

New research warns that central banks designing retail digital currencies face a structural policy dilemma that cannot be solved by technology alone. The review finds that public digital money may improve payment systems and financial inclusion, but central banks cannot simultaneously maximize privacy, financial stability and regulatory compliance without sacrificing at least one of those objectives. The study, titled “Designing Retail Central Bank Digital Currencies: A Systematic Literature Review of Trade-Offs Between Security, Privacy, and Financial Stability,” was published in the International Journal of Financial Studies. Based on a systematic review of 140 peer-reviewed articles, the paper proposes a “CBDC…