This study aims to investigate the strategic determinants motivating central banks to transition from central bank digital currency (CBDC) research to real-world implementation.
The authors use an ordered logit model of 77 countries (2013–2023) and a cross-sectional analysis (2023) that focuses on the impact of the cryptocurrency adoption index. A principal component analysis is also used to construct the institutional quality index and results are validated through ordered probit and lagged models.
Our results identify a “Stability Paradox” in CBDC evolution. While banking stability alone may delay innovation, its interaction with high-quality governance jointly shapes the conditions for advanced implementation. Furthermore, the authors reveal a “cryptocurrency threshold effect” in 2023: private digital asset penetration serves as a threshold-driven catalyst, consistent with a competitive response mechanism once a critical cryptocurrency adoption level is reached.
This paper contributes to the literature by validating the Stability Paradox within an ordinal framework that captures the sequential progression of CBDC adoption stages. It shows that CBDC advancement is driven by the interaction between institutional quality and banking system resilience. Unlike prior studies focusing on linear determinants, the authors propose a triple catalyst model combining governance quality, financial stability and external competitive pressure. The authors further identify a cryptocurrency threshold effect in 2023, suggesting that rising private digital asset activity is associated with a higher probability of advanced CBDC adoption, consistent with a strategic competitive response by central banks.
