Systemic risks and opportunities rise with CBDCs and cryptocurrencies

Digital assets are no longer peripheral to global finance; they are becoming deeply intertwined with traditional markets. Cryptocurrencies like Bitcoin, Ethereum, and Tether are increasingly sensitive to movements in U.S. monetary policy, illustrating a high degree of interdependence between decentralized assets and central banking systems. The analysis shows that crypto price shocks now exert measur

The rapid evolution of digital money is reshaping financial markets, challenging regulators, and redefining consumer behavior in ways unseen since the advent of credit cards. In a new editorial, Ramona Rupeika-Apoga from the Faculty of Economics and Social Sciences, University of Latvia, examines these seismic changes in the paper “The Future of Money: Central Bank Digital Currencies, Cryptocurrencies and Stablecoins,” published in the Journal of Risk and Financial Management (2025).

The study brings together findings from fifteen research contributions, offering a panoramic view of how Central Bank Digital Currencies (CBDCs), cryptocurrencies, and stablecoins are converging to transform global monetary systems.

With the world moving steadily toward a cashless future, the analysis underscores the urgency for regulators, investors, and policymakers to address the opportunities and risks posed by these new forms of money. From systemic stability concerns to adoption challenges and policy gaps, the study presents a detailed roadmap of the economic, technological, and governance issues shaping the digital currency revolution.

Integration and systemic impact of digital currencies

Digital assets are no longer peripheral to global finance; they are becoming deeply intertwined with traditional markets. Cryptocurrencies like Bitcoin, Ethereum, and Tether are increasingly sensitive to movements in U.S. monetary policy, illustrating a high degree of interdependence between decentralized assets and central banking systems.

The analysis shows that crypto price shocks now exert measurable effects on equities and commodities, reinforcing their status as systemic financial instruments. This dynamic introduces new layers of complexity to financial markets, where volatility in the digital currency space can ripple across multiple sectors. As a result, the stability of these markets is emerging as a pressing concern for financial institutions and regulators alike.

Stablecoins, while less volatile than cryptocurrencies, are also central to this discussion. Their rapid adoption in cross-border transactions and decentralized finance (DeFi) platforms highlights their utility but also raises questions about regulation, collateral management, and systemic reliability. The study emphasizes that stablecoins, if effectively governed, could play a pivotal role in stabilizing digital financial ecosystems while facilitating innovation in global payments.

Adoption dynamics and behavioral insights

The paper also examines the behavioral and structural factors influencing the adoption of digital currencies. Drawing insights from studies spanning India to Europe, the research highlights that trust, usability, and reliability are key drivers of adoption for both CBDCs and stablecoins.

In emerging economies, particularly those with well-established digital payment infrastructures like India’s Unified Payments Interface (UPI), CBDC pilots have shown rapid uptake, driven by familiarity and seamless integration into existing financial habits. However, the findings also reveal that digital literacy, perceived security, and socio-economic inclusion remain significant barriers to universal adoption, particularly in underserved communities.

Behavioral economics plays a decisive role in shaping user interaction with digital money. Trust in central banking authorities, transparency in technology deployment, and assurance of data security directly influence the willingness of consumers to engage with new financial technologies. The study argues that a human-centered approach, one that integrates technological innovation with user education and trust-building initiatives, is critical for widespread adoption.

Regulation, governance, and the Road Ahead

The regulatory landscape is lagging behind the speed of digital currency innovation, creating governance gaps that pose risks to market stability and consumer protection. The author emphasizes the urgent need for globally harmonized regulatory frameworks that strike a balance between fostering innovation and safeguarding financial systems.

Key policy priorities identified in the paper include:

• Developing robust governance frameworks for stablecoins and decentralized platforms to prevent systemic contagion.
• Ensuring interoperability and transparency in CBDC systems to promote trust and cross-border usability.
• Addressing operational and cyber risks associated with the rapid digitization of money.

The study also highlights the broader implications of digital currencies for financial inclusion and sustainability. If governed effectively, digital money can support Sustainable Development Goals (SDGs) by expanding access to financial services in underbanked regions, promoting efficiency, and reducing transaction costs. However, without proactive oversight, these innovations risk exacerbating existing inequalities and creating new systemic vulnerabilities.

The research further calls for deeper exploration into several underexamined areas: the impact of digital currencies on banking stability in emerging economies, the integration of sustainability considerations into currency design, and the role of advanced analytics and artificial intelligence in managing systemic risks in real time.