The international monetary system is marked by a hierarchical relationship between currencies, where the US dollar is widely used. Recently, central banks have started to launch Central Bank Digital Currencies (CBDCs), which, in contrast to cryptocurrencies, are issued by monetary authorities. The purpose of this paper is (i) to analyse and explain domestic retail CBDCs in detail, and (ii) to assess whether the creation of CBDCs poses a threat to the US dollar as the key currency of the international monetary and financial system. It will be argued that, despite the innovations a CBDC may bring, the role of the US dollar will not be affected by the introduction of multiple CBDCs (mCBDCs) alone. Although mCBDC arrangements might decentralise the international payment system, the underlying structures supporting today's unipolar system would not automatically change. It is crucial that central banks work together to establish an alternative international monetary system.
Bianca Orsi is a Lecturer in the Economics Department at Leeds University Business School (LUBS). Her research focuses on foreign exchange markets, currency internationalisation and its implications for emerging market economies. She holds a PhD in Economics from the University of Leeds.
Sophia Kuehnlenz is a Senior Lecturer in the Department of Economics, Policy and International Business at Manchester Metropolitan University. Her research focuses on a pluralist approach to economic theory and methodology tied to instabilities and crisis episodes. She holds a PhD in Economics from the University of Leeds.
Annina Kaltenbrunner is a Professor in the Economics of Globalisation and the International Economy at Leeds University Business School. Her research focuses on financial processes and relations in emerging capitalist economies. She holds a PhD in Economics from the School of Oriental and African Studies (SOAS), University of London.
