Monetary Sovereignty in the Digital Age: The Role of Central Bank Digital Currencies
Abstract
This article examines the challenges that blockchain-based digital currencies pose to state monetary sovereignty in the digital era. As technological advancements transform monetary systems, decentralized peer-to-peer transactions threaten to erode state control over monetary policy. We distinguish between wholesale and retail central bank digital currencies (CBDCs), assessing their respective roles in mitigating sovereignty risks. While wholesale CBDCs reinforce traditional monetary authority, retail CBDCs redefine sovereignty by countering the rise of decentralized crypto-assets and foreign CBDCs. We argue for a dual-CBDC system that integrates both models, with a particular emphasis on an indirect retail CBDC framework to enhance financial stability, ensure public accountability, and foster innovation.
Fields of Study & Subjects
Security
Politics
and Digital Transformation
Blockchain Technology Applications and Security
Digital Transformation in Financial Services
Publication details
- Journal / source
- International Journal of Political Economy
- Publisher
- Informa UK Limited
- Volume
- 55
- Issue
- 1
- Pages
- 88–108
- Publication date
- 2 January 2026
- Language
- EN