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Title page 1
Contents 4
About the Author 5
Executive Summary 6
Introduction 6
Conceptual Foundations 7
Mechanisms Through Which CBDCs Can Enhance Fiscal Sovereignty 10
Risks and Constraints of CBDC-Facilitated Fiscal Expansion 12
Governance and Policy Design Principles 14
Future Outlook 15
Works Cited 17
In an era marked by globalization, dollarization and digital financial transformation, fiscal sovereignty (or the ability of states to mobilize and manage public resources independently) is under acute strain.
This paper examines whether central bank digital currencies (CBDCs) can serve as instruments to reclaim national control over public finance without introducing systemic or political risks.
The analysis begins by unpacking the erosion of fiscal autonomy due to dollarization, capital mobility and institutional constraints, particularly in emerging and developing economies. It then explores how CBDCs, as sovereign-issued digital money, offer new capabilities for governments to enhance fiscal transparency, precision and responsiveness.
These include real-time expenditure monitoring, programmable transfers, expanded tax compliance and agile crisis response mechanisms.
However, the paper cautions that CBDCs are not inherently sovereign tools. Their deployment introduces risks such as fiscal dominance, surveillance overreach, digital dollarization and technological dependency. Without robust governance frameworks, privacy protections and institutional readiness, CBDCs may exacerbate the very vulnerabilities they aim to resolve.
To navigate this paradox, the paper proposes four core policy principles:
- preserving the fiscal-monetary boundary
- embedding privacy by design
- fostering multilateral cooperation for digital sovereignty
- cultivating public trust through inclusive governance.
Ultimately, it argues that CBDCs, if responsibly designed and strategically governed, can become pivotal instruments for restoring fiscal sovereignty and enhancing democratic resilience in the digital age.*표시는 필수 입력사항입니다.
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