Central Bank Digital Currencies: Systemic Risk, Liquidity Transmission, and Regulatory Governance
Central Bank Digital Currencies: Systemic Risk, Liquidity Transmission, and Regulatory Governance

Summary/Abstract: Background - Central Bank Digital Currencies (CBDCs) represent a structural transformation of monetary architecture. Every major monetary innovation has reconfigured rather than eliminated systemic risk, and CBDCs follow this pattern introducing design-contingent liquidity risk, novel operational and cybersecurity vulnerabilities, and regulatory governance gaps at sovereign scale. Aim - This paper examines CBDCs through an integrated risk-based framework, analysing liquidity risk, monetary transmission effects, operational and cyber risks, and user adoption dynamics as interconnected rather than independent dimensions. Methods - A comparative analytical review synthesizes monetary economics models, macro-network simulations, institutional reports (BIS, IMF, ECB), and an Austrian user survey (n = 2,006) across three analytical expectations. Results - Liquidity and transmission effects are design-contingent; operational and cyber risks are qualitatively distinct from those of prior financial technologies due to sovereign-scale concentration; adoption dynamics interact with the risk architecture: crisis-driven conversion to CBDC poses greater systemic risk than voluntary gradual adoption. Conclusions - CBDCs do not remove systemic fragility; they redistribute it across liquidity, operational, privacy, and governance channels. The evidence suggests that policy outcomes depend primarily on design choices and rollout conditions, which makes cautious, cash-like, privacy-sensitive implementation the most prudent baseline.

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