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Legal Tender in the Age of Central Bank Digital Currencies

Legal Tender in the Age of Central Bank Digital Currencies
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Author(s): Adekunle Alexander Balogun (University of Ibadan, Nigeria)
Copyright: 2024
Pages: 10
Source title: Global Developments in Central Bank Digital Currency
Source Author(s)/Editor(s): Peterson K. Ozili (Central Bank of Nigeria, Nigeria)
DOI: 10.4018/979-8-3693-5588-6.ch011

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Abstract

This chapter explored the traditional concept of legal tender and the role of the central banks in the issuance and promotion of a country's currency in relation to the monetary policy obligations in the era of digital currencies. The chapter examines the jurisdictional opportunities and limitations inherent in the CBDC in view of the legal tender concept as a default means of settlement of financial obligations in a country. The chapter demonstrated that the benefits of CBDC becoming an acceptable legal tender are contingent upon a robust financial architecture and acceptance of the token by the population. It is recommended that central monetary authorities should leverage current digital technology and innovations in collaboration with the private financial institutions for an efficient transition to the digital financial system.

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