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What Triggers Consumer Adoption of Central Bank Digital Currency?

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Abstract

Central banks around the world are examining the possibility of introducing Central Bank Digital Currency (CBDC). The public’s preferences concerning the usage of CBDC for paying and saving are important determinants of the success of CBDC. However, little is known yet about consumers’ attitudes towards CBDC. Using data from a representative panel of Dutch consumers we find that roughly half of the public says it would open a CBDC current account. The same holds for a CBDC savings account. Thus, we find clear potential for CBDC in the Netherlands. This suggests that consumers perceive CBDC as distinct from current and savings accounts offered by traditional banks. Intended CBDC usage is positively related to respondents’ knowledge of CBDC and trust in the central bank. Price incentives matter as well. The amount respondents say they would want to deposit in the CBDC savings account depends on the interest rate offered. Furthermore, intended usage of the CBDC current account is highest among people who find privacy and security important and among consumers with low trust in banks in general. These results suggest that central banks can steer consumers’ adoption of CBDC via the interest rate, by a design of CBDC that takes into account the public’s need for security and privacy, and by clear communication about what CBDC entails.

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Data Availability

The data used in this study are available upon request.

Notes

  1. According to, among others, Marchiori (2021), the relationship between the development of prices of (virtual) goods paid with virtual currencies and the supply of virtual currencies may be opposite to what is predicted by monetary theory when agents providing payments services are rewarded with newly issued virtual currency. A decline in the issuance of a virtual currency raises the prices of goods paid with it. However, Balvers and McDonald (2021) show that it is theoretically possible to design a global digital currency that mimics the ideal design and whose value reflects the price development of a tradeable goods basket.

  2. See the CBDC Tracker from the Atlantic Council at www.atlanticcouncil.org/cbdctracker/.

  3. Of the 771 panel members that did not fill in the survey, 727 people did not response and 44 people partly filled in the survey.

  4. For example, Bolt et al. (2010) have a response rate of 72.7% and Van Rooij et al. (2012) report a response rate of 74.4%.

  5. People who are selected for participation in the panel but who do not have a computer with Internet access receive the necessary equipment.

  6. For more information on Centerpanel and DHS, see Teppa and Vis (2012).

  7. The survey is available upon request.

  8. The list of reasons is based on the discussion of preconditions, objectives and design choices for CBDC by Wierts and Boven (2020).

  9. The question reads as follows “Are you familiar with the following terms? Cash, digital money, public money, private money, central bank money, commercial money, central bank digital currency (CBDC).” For each term the answer options are: “No, I have never heard of it”, “Yes, I have heard of it, but I don't know what is meant with it”, and “Yes, I know what is meant with it”.

  10. The response shares in Fig. 1 and the lower and upper bound of the balance categories above EUR 0 suggests that, on average, the Dutch would transfer between EUR 260 and EUR 700 to the CBDC current account. These amounts correspond with 10–25% of the average balance of EUR 2,800 that Dutch citizens had on their current account in 2019.

  11. The impact is estimated as follows. People who find safeguarding their privacy very important have a two points higher score on the variable importance privacy CA than people with a neutral position. They have an 8 percentage points higher likelihood to intent to adopt a CBDC current account, as the marginal effect of a 1-point higher score on importance privacy CA amounts 4 percentage points.

  12. People with very much trust in their own bank have a four points higher score on the variable narrow-scope trust in banks than people with very little trust, so we multiplied the marginal effect presented in the last column of Table 3 by four to estimate the impact (4 × 0.04 = 0.16).

  13. The coefficient of the inverse Mills ratio (lambda) is positive and significant in the fourth model (Table 4, column 4). So, without correction, the coefficient estimates would have been upward-biased.

  14. People who trust the central bank a lot have a three points higher score on the variable trust in the central bank than people with absolutely no trust, so we multiplied the marginal effects presented in Table 5 by three (-0.04*3 = -0.12 and 0.07*3 = 0.21).

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Acknowledgements

We would like to thank colleagues at DNB for helpful comments on earlier versions of this paper and the questionnaire. We also received insightful comments from members of the European Central Bank High Level Taskforce on CBDC. One anonymous referee provided many helpful suggestions. We are grateful to Miquelle Marchand and Josette Janssen of Centerdata for collecting the data and for their help with the questionnaire. The views expressed in this paper are our own and do not necessarily reflect those of DNB, the ESCB or SEO Amsterdam Economics. All remaining errors are the authors’.

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Authors and Affiliations

  1. SEO Amsterdam Economics, Amsterdam, The Netherlands

    Michiel Bijlsma

  2. Tilburg University, Tilburg, The Netherlands

    Michiel Bijlsma

  3. De Nederlandsche Bank (DNB), PO Box 98, 1000 AB, Amsterdam, The Netherlands

    Carin van der Cruijsen, Nicole Jonker & Jelmer Reijerink

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  1. Michiel Bijlsma
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Correspondence to Carin van der Cruijsen.

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Appendices

Appendix 1. Introductory text CBDC

Currently, you have access to:

  1. 1:

    cash: coins and banknotes issued by the central bank (public money/central bank money) and

  2. 2:

    digital money: the money you hold on your current and savings accounts at commercial banks, like ING, Rabobank, ASN bank and ABN AMRO (private money /commercial bank money).

Policymakers are considering whether citizens, like commercial banks, should be able to have an account with the central bank. There is no such possibility yet.

Money on such an account is known as ‘digital central bank money’. This is a new form of public money. We call it here a digital banknote. You will be able to pay with it in different ways, just like with the digital money you are currently holding at the current account of your bank. For example, you will be able to pay directly with digital banknotes for your purchases at physical shops using your debit card or smartphone.

It will also be possible to use digital banknotes to transfer money from your current account to a digital wallet on your smartphone, which you can subsequently use to pay your purchases with. When you run out of digital banknotes in this digital wallet, you can refill it.

Appendix 2. Description of variables

Table 8

Table 8 Description of variables included in the regression analyses
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Appendix 3. Detailed tables

Tables 9, 10, and 11

Table 9 Why the public thinks it can be useful to introduce CBDC
Full size table
Table 10 Features at which CBDC current accounts should perform better than current accounts offered by commercial banks
Full size table
Table 11 Features at which CBDC savings accounts should perform better than savings accounts offered by commercial banks
Full size table

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Bijlsma, M., van der Cruijsen, C., Jonker, N. et al. What Triggers Consumer Adoption of Central Bank Digital Currency?. J Financ Serv Res 65, 1–40 (2024). https://doi.org/10.1007/s10693-023-00420-8

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