THE ROLE OF CENTRAL BANKS IN DIGITAL CURRENCY REGULATION

Abstract

The rapid expansion of digital currencies has introduced profound challenges and opportunities for contemporary monetary systems, compelling central banks to reconsider their regulatory roles and conceptual foundations. This paper examines the role of central banks in regulating digital currencies, with particular attention to the ontological, systemic, and operational dimensions of regulation. It distinguishes between privately issued digital currencies and central bank digital currencies (CBDCs), highlighting their differing implications for monetary sovereignty, financial stability, and regulatory design. Drawing on insights from complexity theory and selected concepts from the philosophy of science and quantum mechanics—such as contextuality, relationality, and systemic invariance—the paper develops an analytical framework for understanding the adaptive nature of digital currency regulation. It argues that traditional, static regulatory models are insufficient to address the dynamic and interconnected characteristics of digital financial ecosystems. Instead, central banks must adopt flexible, context-sensitive, and resilient regulatory approaches that balance innovation with stability, privacy with oversight, and national objectives with global coordination. Through discussion of contemporary policy approaches adopted by major central banks, the study highlights the importance of experimentation, institutional learning, and international cooperation. The paper concludes that effective digital currency governance requires not only technical and legal innovation but also a reexamination of the conceptual foundations underpinning money, regulation, and systemic control in the digital age.