Digital Money: Opportunities, Challenges and the Future Outlook

Abstract

Purpose:This study explores the opportunities, challenges, andthefuture outlook of emerging digital currenciesin the like ofcentral bank digital currencies (CBDCs), cryptocurrencies, and stablecoins. The aim is to understandhow these digital monetary forms are shaping theglobaldigital currency ecosystem.Methodology:A systematic literature review of 281 studies on digital currencies, published between 2010 and 2024, was conducted. The review focused on identifying key themes such as the regulatory landscape for cryptocurrencies, privacy and anonymity concerns, and technological risks associated with digital currencies.Findings:The review unraveledseveral dominantthemes, including increasing efforts by regulatory authorities to develop comprehensive frameworks to provide legal clarity, enhance consumer protection, and foster innovation in the digital finance sector. However, a significant gap was identified in the integration of regulatory frameworks with Behavioral Economic principles. To address this, the study proposes an integrated regulatory-behavioralframework to influence user behaviourand promote the secure and stable adoption of digital currencies.UniqueContribution to Theory, Policyand Practice: The proposed regulatory-behavioral framework offers an innovative approach to digital currency regulation by integrating insights from Behavioral Economics. This contribution highlights the need for collaborative efforts among policymakersto ensure regulations evolve in tandem with advancements in digital financial technologies. The study envisions a future where CBDCs, cryptocurrencies, and stable coinscoexist, with CBDCs playing a central role in establishing a stable, accessible, and efficient digital monetary system