II. Monetary theory and international spillover aspects of digital currencies Zoltán Szalai The possibility, potential ways and necessity of introducing a central bank digital currency are influenced by the framework in which money itself is interpreted. The same goes for the role and features attributed to it, and the framework in which the operation and principal mechanisms of the financial system are analysed. The study presents three main analytical frameworks, listing the arguments for introducing a central bank digital currency in the different approaches. The challenges faced by central banks on account of private players increasingly offering various payment alternatives to traditional central bank money are discussed, together with the possible alternative central bank digital currency solutions, while considering which should be chosen under what scenarios.
1. Traditional, textbook approach or transaction approach In the traditional, textbook approach, money is primarily a technical instrument that facilitates the exchanging of goods and services but is otherwise neutral from the perspective of real economy developments. The two other aspects, the standard of value and store of value functions, arise from and support the transaction function. This theoretical framework assumes that money has evolved as a result of horizontal exchanges, through spontaneous selection over the centuries, and that it operates
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