Why strong regulators move slowly: A global paradox in central bank digital currency adoption

Abstract

Why do countries with strong regulatory institutions progress more slowly in Central Bank Digital Currency (CBDC) development? Using a global panel of 133 countries over 2017–2024, this study examines CBDC progression as an ordinal policy innovation process. Mixed-effects ordered logit estimates show that digital readiness, captured by internet usage, cybersecurity capacity, and digital literacy, is positively associated with more advanced CBDC stages, while regulatory quality exhibits a negative association. High-quality regulators coincide with legal certainty, financial stability, and privacy over rapid experimentation. The findings indicate that CBDC adoption co-varies with regulatory prudence and public trust constraints, not technological feasibility alone.