Stablecoins, CBDCs, and the digital bridge to global finance – What characteristics make countries endeavor CBDC projects?

The adoption of central bank digital currencies (CBDCs) is accelerating, with four nations deploying them by 2024 and over a hundred considering adoption. CBDCs offer a digital alternative to traditional fiat currency, managed by central banks, aiming to enhance payment efficiency, ensure privacy, promote financial inclusion, and counter the rise of privately issued stablecoins. Despite extensive research on CBDCs, little is known about the factors driving countries to pursue these projects. This paper explores key determinants, such as political regime, human development, economic freedom, and perceived corruption, and examines how stablecoins shape dynamics.