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Article

Financial Literacy and Behavioral Intention to Use Central Banks’ Digital Currency: Moderating Role of Trust

by
Mohanamani Palanisamy
1,
Maria Tresita Paul Vincent
2,* and
Md Billal Hossain
2
1
KCT Business School, Kumaraguru College of Technology, Coimbatore 641049, India
2
School of Business and Economics, Westminster International University in Tashkent (WIUT), Tashkent 100047, Uzbekistan
*
Author to whom correspondence should be addressed.
J. Risk Financial Manag. 2025, 18(3), 165; https://doi.org/10.3390/jrfm18030165
Submission received: 13 January 2025 / Revised: 19 February 2025 / Accepted: 13 March 2025 / Published: 19 March 2025
(This article belongs to the Special Issue Fintech, Business, and Development)
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Abstract

:
Building on the Innovation Diffusion Theory, this study proposes and explores the influence of financial literacy on the behavioral intention to use central banks’ digital currency (CBDC) and the moderating role of trust of respondents in the financial institution on the above relationship. This study has employed a quantitative research design to examine the relationship between financial literacy, behavioral intention to use CBDC and trust. The final sample comprised 241 respondents who had used CBDC across India. The statistical relationship between the above variables was assessed using PROCESS macro in SPSS 23.0. Findings revealed that financial literacy emerges as a strong predictor of CBDC use. Individuals with higher financial literacy are more likely to understand the features, benefits and risks associated with adopting CBDC. The interaction effect reveals that as financial literacy increases, the relative importance of trust diminishes. On the other hand, those who lack sufficient knowledge of financial literacy depend more on trust to fill in their knowledge gaps. This is one of the first studies to scientifically support the relationship between trust and financial literacy and how both influence behavioral intention to use CBDC. This research contributes valuable knowledge to the discourse on the use of CBDC, which is crucial for achieving a nation’s broader digital transformational goal.

1. Introduction

The concept of money has changed overtime (Moore, 2023). Earlier communities used the barter system, in which they directly traded products and services, to create money (Peneder, 2022). This led to the adoption of commodity money, which included shells, animals, grains and eventually metals. Because physical currency wears out and needs to be replaced on a regular basis, using it is costly and requires significant investment in labor and anti-counterfeiting equipments (Adamu Ahmed et al., 2022). Businesses and banks invest a lot of money in security measures to thwart theft and robbery, as well as cash handling services including sorting, counting and reconciling transactions. The cost of printing currency varies significantly across countries, depending on the volume of currency required, complexity of security features and materials used (Bindseil et al., 2021). In the United States, the Bureau of Engraving and Printing (BEP) spends approximately $1 billion annually to produce banknotes. Further, depending on the denomination, approximately 5 to 14 cents are incurred to print each note.
The Reserve Bank of India (RBI) annually incurs approximately $500 million on printing new notes (Tagat et al., 2024). Countries invest heavily in advanced security features to prevent counterfeiting, further increasing their printing expenses (Butticè et al., 2020) The per capita currency availability was ₹23,000 as of 2023 (Eichengreen et al., 2022). The late 20th and early 21st centuries saw an era of digital banking, with the widespread adoption of online banking, mobile banking apps and contactless payment systems (Wewege et al., 2020). These technological innovations have reshaped the way currency is handled, making transactions faster, more efficient and more secure than ever. As electronic banking systems began to proliferate, central banks explored the potential benefits of issuing digital versions of their fiat currencies (Dow, 2019).
The Bank of International Settlements report revealed that 86 percent of central banks around the globe are actively researching the potential for issuing and using CBDC, 60 percent are experimenting with the usage of technology in using CBDC and 14 percent are deploying pilot projects (Egyir Biney, 2024). CBDC can be broadly divided into two categories, wholesale CBDC and retail CBDC. In wholesale CBDC, it facilitates interbank settlements, cross-border remittances and settlements in capital and security markets. This allows the central bank to retain its control over the underlying CBDC network. A retail CBDC can be a direct issuance, hybrid issuance or indirect issuance. Banks handle retail transactions whereas the central bank handles wholesale transactions (Priyadarshini & Kar, 2021). The CBDC can also be used as ‘helicopter money’, which aids in emergencies. Another major benefit of using CBDC is offline payment, which is based on near-field communication (NFO) technology. Locations with weak networks will be highly secure and an easy solution for performing peer-to-peer transactions (Eichengreen et al., 2022). Even though the adoption and usage of CBDCs have more gains, they are not free from pain while them. Cyber hacks leading to server blockages, unforced timeouts, service declines or cyber threats including distributed denial of service may disrupt services (Pachare et al., 2023).
India boasts of over 750 million smartphone users, a number that has continued to grow rapidly due to affordable devices and data plans (Rana et al., 2023). Despite this technological penetration, approximately 190 million adults remain unbanked (Sinha & Piedra, 2021). This discrepancy highlights the potential of mobile technology to bridge the financial inclusion gap (Falaiye et al., 2024). However, barriers remain, including digital literacy, financial literacy and internet connectivity in rural areas. CBDC not only caters to the requirements of tech-savvy youth but also serves the needs of featured phone users from lower socio-economic groups within the country (Pachare et al., 2023). The usage of central bank digital currencies is gaining global attention, yet its success depends on individual’s behavioral intentions to use it in the day-to-day life of a common man. Further CBDC was introduced in India only by December 2022, making it relatively a new financial instrument. Despite the increasing push for digital currencies globally, there is a lack of research exploring the interplay between financial literacy and trust in determining behavioral intention to use CBDCs in developing nations like India. This study seeks to address this gap by investigating how financial literacy impacts individuals willingness to use CBDC. Further, we examine the moderating role of trust and whether they affect the relationship between financial literacy and end users’ behavioral intention towards using CBDC. Understanding the influence of the above variables is essential for policy makers, financial institutions and central banks to develop effective educational programs and trust-building strategies that enhance the use of CBDC.
Thus, this study examines the impact of financial literacy on the intention to use CBDC transactions.

1.1. Theoretical Framework and Hypothesis Development

This study is based on Innovation Diffusion Theory (IDT). The usage patterns of innovative ideas, products and technologies spread within a population or social system over time (Miller, 2015). In this study, we place financial literacy as Financial Innovation as enabler of the usage of central banks’ digital currency (CBDC). Individuals with high exposure to financial literacy are more likely to understand the benefits, risks and other operational aspects of using CBDC, which in turn increases their behavioral intention to adopt this new technology. Trust plays a moderating role as individuals perceive the credibility and security of digital innovation, thus enhancing the diffusion of CDBC in society among those with higher financial awareness. financial literacy and trust fosters the smoother diffusion of CBDC.

1.2. Financial Literacy and Behavioral Intention to Adopt CBDC

The term financial literacy emerged during the late 20th century, gaining momentum as a response to increasing financial complexity and the need for individuals to make informed financial decisions (Goyal & Kumar, 2021). Financial literacy refers to an individual’s ability to understand financial concepts and apply them in everyday decisions related to money (Lučić et al., 2023). When an individual is financially literate, they are better equipped to budget and manage their income and expenses, which can lead to improved financial stability and reduced financial stress (Andarsari & Ningtyas, 2019). A study by (Gomes et al., 2021), revealed that financial literacy enables an individual to be a more cautious consumer, capable of comparing financial products and services to secure better deals and avoid unnecessary fees. They can plan for emergencies and unexpected expenses, creating a safety net that provides peace of mind and resilience against financial setbacks. Financial literacy plays a vital role in understanding the concept of central banks’ digital currency and how it is issued, stored and transacted (Narayanan, 2020). This enables individuals to assess numerous factors such as transaction costs, security features and other privacy concerns when transferring funds, making purchases or withdrawing money is exposed to significant risks in the digital financial ecosystem, necessitating the crucial role of financial literacy (Lusardi & Messy, 2023). Individuals who lack sufficient financial literacy may fall as a victim or hesitate to use CBDC, limiting the overall usage of CBDC for day-to-day life transactions. Such kind of detailed evaluation empowers individuals to make informed decisions about whether to use CBDCs for their transactions and savings (Fernández-Villaverde et al., 2021). A recent study in revealed that digital financial literacy positively influences the financial Decision-Making of Women in India (Mishra et al., 2024). Financial literacy fosters awareness of the regulatory environment surrounding CBDCs. This knowledge enhances their confidence in adopting CBDCs within a regulated framework, thus ensuring compliance with financial laws and regulations. It promotes responsible financial behavior when using CBDCs as they tend to be better equipped to manage their CBDC wallets securely, protect their digital assets from fraud and cyber threats and navigate potential risks associated with digital currencies. Financial literacy plays a crucial role in helping individuals understand, evaluate and adopt central bank digital currencies (Naveenan et al., 2024). It enables individuals to comprehend the concept, technical aspects, implications and regulatory environment of CBDCs, empowering them to make informed decisions and using digital currencies responsibly. As central banks continue to explore and develop CBDCs, financial literacy will remain essential in ensuring that individuals can effectively participate and benefit from the evolving digital economy. However, according to a National Centre for Financial Education (NCFE) only 27% of the Indian population is financially literate (NCFE Annual Report, 2023–2024). Making it even more crucial to be studied in India scenario.
At the same time, the complexity of CBDC may deter its adoption, especially among individuals with lower financial literacy (Shkliar, 2020). At the same time the complexity of CBDC such as understanding digital wallets, encryption and how transactions are processed on a block chain-based system may deter adoption, especially among individuals with lower financial literacy (Narula et al., 2023). Individuals with higher financial literacy may already be familiar with digital payment systems such as mobile banking and UPI payments, because adopting CBDC is a natural progression in the digitalization of financial services (Kumar & Gupta, 2024; Mahesh et al., 2024). Financial literacy enhances this sense of compatibility, further strengthening the intention to use CBDC. CBDC refers to the ability to experiment with an innovation before making full commitment, while observability refers to the visibility of the innovation’s benefits to others. Based on the above discussion we hypothesize that financial literacy positively influences the behavioral intention to use CBDC.
H1. 
Financial literacy positively influences the behavioral intention to use CBDC.

1.3. The Moderating Role of Trust

The trust refers to belief or confidence in the reliability, integrity and abilities of an individual, organization or system (Colquitt & Baer, 2023). In the financial market, the lack of awareness and trust in financial institutions among individuals play a crucial role in the usage of financial instruments and trade. A recent study examined that positive attitude and confidence when combined with financial literacy, empowers individual investors with the knowledge and skills for appropriate financial decision-making (Maheshwari et al., 2025). Trust plays a significant role in personal relationships, business transactions and social interactions of an individual as it facilitates cooperation, reduces uncertainty and fosters a sense of security and mutual respect (Schilke et al., 2021). In alignment with IDT, this suggests that innovations are more likely to be adopted when they are perceived as more dependable and trustworthy. Individuals with higher financial literacy are more capable of critically evaluating the security features of CBDC in terms of encryption and the role of central banks in digital currency management (Amarta & Latifah, 2023). Trust as a moderator of individuals’ financial knowledge, enhances their behavioral intention to use CBDC (Tronnier et al., 2022). Trust also mitigates the perceived risks and uncertainties associated with the adoption of CBDC in integrating it into daily life (Mazambani, 2024). Trust in financial institutions has been established to impact crucial individual financial markers, like risk-seeking attitudes of clients in the digitalization of microfinance (Sajan & Joseph, 2024). In the financial trade context, trust is of vital concern and encompasses various dimensions including trust in the issuing authority, the technology underlying the digital currency and the overall financial system (Zhang et al., 2021). S. Gupta et al. (2023) revealed that when users trust that technology is secure, dependable and will perform as expected their intention to adopt and use of CBDC increases. (Sutton-Lalani et al., 2023; Sugio, 2022) revealed that testimonials, reviews and word-of-mouth recommendations build large amounts of social proof and encourage wider use of CBDC. Various researchers (Kaur et al., 2024; Bijlsma et al., 2024) have examined trust as a predictor of an individual’s willingness to adopt CBDC, and less attention has been paid to the relationship between financial literacy and the intention to use CBDC in their day-to-day life. Further, in their study Adil et al. (2023) emphasized that financial institutions should promote trust and trusting behavior in financial institutions as it is vital from the perspective of financial development and also to empower the individuals to gain from institutional services as well as to guard them, from possible negative effects (like financial frauds), which are more likely to be present outside of regulatory boundaries. Thus, the trust in financial institutions plays a crucial role alongside financial literacy. Based on these discussions we propose the following,
H2. 
Trust moderates the positive relationship between financial literacy and behavior intention to use CBDC, such that the relationship is stronger when trust is high.
Based on the propositions theoretical model was framed as depicted in Figure 1.

1.4. Behavioral Intention to Use CBDC

Behavioral intention refers to an individual’s subjective probability of engaging in a specific behavior Bai (2020). Behavioral intention remains the key predictor, and the stronger the intention to engage in a behavior, the more likely it is that an individual will perform the actual behavior (Singh & Srivastava, 2020). Behavioral intention is influenced by several factors and when individuals believe that CBDC will enhance their financial transactions by faster payments, execute transactions at lower costs and ensure greater security, their ‘behavioral intention to use CBDC strengthens (S. Gupta et al., 2023). Various studies (Chee et al., 2024). Liu et al. (2024) have used perceived ease of use, ease of use, attitude, social influence and trust as predictor of behavioral intention to use CBDC, but less consideration has been to assessing the relationship between the predictors of behavioral intention.

2. Methods

2.1. Participants and Procedure

The main objective of this study is to investigate the link between financial literacy and behavioral intention to use CBDC. The study also examines how trust moderates the relationship between financial literacy and behavioral intention to use CBDC among the public. The population of the study comprises all those who are aware of CBDC and are willing to use CBDC. An online survey was carried out using google forms across social media to collect data. Convenience sampling was used for this study. Participants in this study were assured of the strict confidentiality of the data for academic usage and anonymity of their responses. To ensure that respondents were aware of CBDC, we used a pre-screening filter question ‘Are you aware of Central Bank’s Digital Currency’ to confirm respondents familiarity with CBDC, ensuring that those who had read about, discussed or used CBDC were included. Originally, the instrument was shared to 900 respondents, out of which we were able to get replies from 248. Among the 248 respondents screened, 7 were cast off due to incomplete responses, resulting in a sample size of 241 respondents for this study.

2.2. Measures

The study employed a multi-item scale to measure three key constructs: financial literacy, trust and behavioral intention using a 5-point Likert scale from 1 to 5; 1 = strongly disagree and 5 = strongly agree. Financial literacy was assessed using items related to understanding the purpose of the CBDC, its purchase methods and security measures. Trust was measured by items assessing the perceived trustworthiness and reliability of the CBDC mobile application and the assurance provided by the legal and technological structures. behavioral intention was evaluated based on the respondents’ willingness and intention to accept and use CBDC for various transactions. (Table 1) shows the items adapted from previous research and designed to capture the study variables.

2.3. Data Analysis

Hypothesis formulation and mediation analysis were performed based on the methodological recommendations of Hayes 2008. Warp PLS was used to conduct confirmatory factor analysis (CFA), examining measurement model and validity of the adopted study measures. This confirms the discriminant and convergent validity of the instrument items. Subsequently, using the PROCESS macro in SPSS 23.0. With five thousand bootstrapped samples following Preacher and Hayes (2008), the structural equation model (SEM) was used to test the hypothesized moderation model. Of the 241 respondents, 38 were female and 203 were male. Also, 43% of respondents were between the age group of 21 and 30 years, 35% of respondents were between 31 and 40 years, 13% were between 31 and 40 years, 8% were between 51 and 60 years and 1% were above the age of 60 years. Further analysis was conducted in two stages. In the first stage, Harmon’s single-factor test was applied to check for common method bias. Initial descriptive tests were conducted using SPSS software. The reliability and validity of the scales were confirmed. The reliability of the scales was assessed using Cronbach’s alpha values. In the second stage of the study, the hypotheses were assessed using structural equation modeling using warp-PLS. The moderation effects were assessed using SPSS Macro-Hayes Model Template 1.

2.3.1. Analysis and Results

The fit of the proposed model depicted in Figure 1 was tested using warp-PLS v.6.0 statistical software (Kock, 2015). Each of the constructs such as financial literacy, behavioral intention to use CBDC and trust are represented by latent factors and each of the latent factors was assessed using specific scale items. The fit indices are provided in Table 2, which shows the fit of the acceptance model. The mean, standard deviation and correlations (Table 2) indicated a reliable correlation between the variables under study. Convergent and discriminant validity were assessed using average extracted variance (AVE) and maximum shared variance (MSV), which were found to be above threshold levels and approve validity and reliability tests for the measures (Table 3). The reliability of the constructs (Cronbach values) was above the accepted threshold (financial literacy 0.817, trust 0.829, behavioral intention to use CBDC 0.917).

2.3.2. Test of the Measurement Model

Each of the constructs, such as financial literacy, trust and behavioral intention, are represented by latent factors. Each latent factor was assessed using specific scale items. Fit indices are provided in Table 2, which permits an acceptable fit value for the model.
The mean, standard deviation and correlations (Table 3) indicated a reliable correlation between the variables under study. Convergent and discriminant validity were assessed using average extracted variance (AVE) and maximum shared variance (MSV) which were found to be above threshold levels and approves validity and reliability tests for the measures (Table 4).
The first step in structural equational modeling is to assess the measurement model, which includes the evaluation of construct reliability, indicator reliability, convergent validity and discriminant validity of the outlined constructs. Construct reliability was determined using composite reliability (CR) and Cronbach’s alpha (CA) the criterion is that the CR value should exceed 0.07 (Nunnally, 1978) to indicate the adequate reliability of the construct. The measurement model results, as tabulated in Table 4 showed that the CR values obtained for the present study were greater than 0.8, thus confirming adequate construct reliability. The reliability of the next indicator was assessed using Cronbach’s alpha, in which CA values must be higher than 0.7. As a result, the CA for all factors was acceptable. The convergent Validity of the constructs for this study was verified using Average Variance Explained (AVE), which should exceed 0.50. As the result revealed that all constructs had substantial AVE, the convergent validity of constructs for this study was verified. Detecting multicollinearity using Variance Inflation Factors (VIFs), a VIF measures the extent to which multicollinearity has increased the variance of an estimated coefficient. The general rule of thumb is that VIF value exceeding 4.00 corresponds to tolerance value of 0.25, which is taken as 1/0.25 = 4. The VIF value of 10.00 corresponds to the tolerance value of 0.10(1/0.10 = 10), these indicate the signs of serious multicollinearity required correction (Hair et al., 1995). Based on the test of multicollinearity diagnostics, all the VIF values listed in Table 4 are below the common threshold value of 5, which indicates that multicollinearity is not a significant concern for these constructs in the identified model. The VIF values suggest that the predictor variables are moderately correlated but are not a major issue in the regression analysis. The CA, CR, AVE and VIF values are listed in Table 4.

2.3.3. Hypothesis Testing

To assess the existence of a direct effect between financial literacy and behavior intention to use CBDC path analysis was conducted using Warp PLS. Direct effects were assessed using structural model. The study found a significant positive effect of financial literacy on the behavioral intention to use CBDC. Hypothesis 1 was accepted. Next, to assess the moderating role of trust in Hypothesis 2, the PROCESS method (Preacher & Hayes, 2008) was used to deduce the presence of indirect effect if present. The bootstrapping procedure was followed with approximately five thousand samples to obtain a 95% confidence interval (CI) with indirect effect estimates. The codes for moderation analysis were captured from the SPSS—Hayes Macro output, and graphical representation were created using MS Excel. Lastly, regarding the moderating hypothesis, H2, the indirect outcome of financial literacy on the behavioral intention to use CBDC was significant for OBSE (beta = 0.333 **), and the positive moderating role of trust is represented in Figure 2. Table 5 depicts the interaction effect of financial literacy on the behavioral intention to use CBDC. The direct effect of financial literacy on the behavioral intention to use CBDC in the presence of trust as well interaction (moderation effect) effect is evident from the tables.
In the estimation of SEM using Warp PLS, the results were assessed using the outer and inner models, which were assessed using a linearity test based on the RRT—Ramsey RESET test to determine the relationship between two linear latent variables. Based on the results in Table 2 with an α value of 0.05, the relationship between financial literacy and trust, trust and behavioral intention to use CBDC was found to be significant, whereas there was no linear relationship between financial literacy and behavioral relationships

3. Discussion

The main purpose of this paper was first to look whether financial literacy has an optimistic effect on the behavioral intention to use CBDC, and the second one was to look at whether trust has a positive effect on the above-mentioned relationship. The results revealed sufficient support for H1 (financial literacy has a positive impact on the behavioral intention to use CBDC) and the moderating hypothesis put forward was also accepted. Interpreting trust moderated the relationship between financial literacy and behavior with the intention to use CBDC. The results of the study are in accordance with (S. Gupta et al., 2023). Our findings align with Innovation Diffusion Theory, which posits that a more informed and educated population is more likely to adopt innovative financial technologies. Financial literacy emerged as a significant predictor with a beta of 1.2634 indicating a positive relationship with the intention to use CBDC. Conversely, individuals with lower financial literacy may depend more on trust to drive their intention to adopt CBDC. This interaction effect highlights the complexity of the adoption process, suggesting that educational initiatives to increase financial literacy could be beneficial in fostering trust and intention to use CBDC.

3.1. Theoretical Implications

This study investigates the role of financial literacy on behavioral intention to use CBDC from the perspective of innovation diffusion theory. The major factors that reflect the usage of CBDC are awareness and knowledge about the usage of financial products and services in combination with the application of technology. This study is the first to investigate the impact of financial literacy on behavioral intention to use CBDC. This study is significant because of the unique economic landscape with large, diverse populations with varying levels of financial literacy, from urban, tech savvy individuals to rural populations with limited access to financial education. Trust is equally significant, where the adoption of digital payment has surged, but concerns about data security and privacy remain high. Trust-building initiatives are essential to drive the adoption of CBDC ensuring the participation of both financially literate and less literate populations and fostering a smoother transition to digital currency adoption.

3.2. Practical Implications

The practical implications of studying financial literacy, trust and their interaction on the behavioral intention to adopt central banks’ digital currency are multifaceted. financial literacy plays a pivotal role in the innovation process in a country with has diverse population and significant disparities in education levels and access to financial information. Practical implications for policy makers and financial institutions include developing widespread, accessible educational programs on digital currencies that can be incorporated into existing financial inclusion programs, such as Pradhan Mantri Jan Dhan Yojana (PMJDY, 2014) Pradhan Mantri Mudra Yojana (PMMY), Atal Pension Yojana (APY, 2015) and Digital Payment Initiatives, India Post Payments Bank (IPPB, 2018) especially unbanked rural population that may lack access to traditional banking services. Trust is a fundamental element in reducing uncertainty regarding innovative technologies. Building trust becomes even more crucial in CBDC, which involves managing sensitive financial data and requires confidence in digital infrastructure. More transparent communication about the safety, security and privacy of CBDC transactions is essential by expanding the internet and mobile connectivity, especially in rural areas as any system failures or security breaches could severely undermine trust. Providing robust customer support to manage concerns and technical issues will reduce barriers to use, especially for first time users who are unfamiliar with digital currencies.
The interaction effect between financial literacy and trust, reinforces the notion that adoption is non linear. The negative interaction observed between financial literacy and trust suggests that as financial literacy increases the relative importance of trust diminishes. This highlights that trust-building efforts may need to be more intensive for those with lower levels of financial literacy, who may sometimes rely more on institutional trust to compensate for their lacunae in knowledge about financial literacy. On the other hand, individuals with higher financial literacy might require less focus on trust building but more emphasis on technical features. Early users with their experience can serve as role models or informal educators for their communities, contributing to the diffusion of CBDC (M. Gupta et al., 2023). This user-centered approach not only enhances the trust and literacy around CBDC but also the system based on real world needs and concerns, further accelerating its widespread usage and reach of the specific needs of different population segments.

3.3. Limitations and Future Research

Future research could explore the role of digital literacy alongside financial literacy could provide further insights, as digital platforms have become increasingly integrated into financial services. Longitudinal studies could track changes in public perception and behavioral intention over time as public awareness increases and CBDC infrastructure also developed. Cross-cultural studies that compare the adoption of CBDC with other countries with similar or contrasting economic and technological landscapes could provide valuable insights into CBDC. Further investigations regarding the impact of various trust-building mechanisms such as government policies, regulatory frameworks on enhancing financial literacy and trust in CBDC can be attempted. Another perspective is to understand how to mitigate risks related to privacy, cybersecurity and fraud, which can also offer useful insights for building trust and the adoption of CBDC. Finally, investigating the role of CBDC in promoting financial inclusion, particularly for marginalized or underserved populations, can provide insights for more inclusive policy development. The research areas mentioned above are critical for supporting the successful transition and usage of CBDC.

4. Conclusions

In conclusion, our study and model provide critical insights for ensuring a successful and inclusive update of CBDC. Trust in financial institutions and central banks’ digital systems plays a pivotal role in overcoming hesitancy. For individuals with lower financial literacy, building trust through transparency, secure infrastructure and user-friendly platforms becomes essential, while for more literate users, more focus is placed on the technological advantages of using CBDC. By carefully addressing the above, central banks can create a robust, trust-driven environment that encourages the widespread usage of CBDC across its diverse socio-economic landscape, leading to greater financial inclusion and efficiency in the digital economy.

Author Contributions

Conceptualization, M.P., M.T.P.V. and M.B.H.; methodology, M.P., M.T.P.V. and M.B.H.; software, M.P. and M.T.P.V.; validation, M.T.P.V. and M.B.H.; formal analysis, M.P. and M.T.P.V.; investigation, M.T.P.V. and M.B.H.; resources, M.T.P.V.; data curation, M.P. and M.T.P.V.; writing—original draft, M.P. and M.T.P.V.; writing—review and editing, M.P., M.T.P.V. and M.B.H.; visualization, M.T.P.V.; project administration, M.T.P.V.; supervision, M.B.H.; funding acquisition, M.B.H. All authors have read and agreed to the published version of the manuscript.

Funding

This research work did not receive any specific funding from any specific body or organization.

Institutional Review Board Statement

Ethical review and approval were waived for this study due to the data were collected and analyzed anonymously.

Informed Consent Statement

Informed consent was obtained from all subjects involved in the study.

Data Availability Statement

The data presented in this study are available on request from the corresponding author.

Acknowledgments

We sincerely thank the anonyms reviewers of this paper for their insightful and helpful recommendations.

Conflicts of Interest

The authors hereby declare no conflicts of interest.

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Jrfm 18 00165 g001
Figure 1. Proposed Moderated Model.
Figure 1. Proposed Moderated Model.
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Figure 2. Interaction between trust and financial literacy on behavioral intention to use CBDC.
Figure 2. Interaction between trust and financial literacy on behavioral intention to use CBDC.
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Table 1. Measures of the study variables.
Table 1. Measures of the study variables.
DimensionsItems References
Financial LiteracyI know about the purpose of using CBDC.(Ravikumar et al., 2022)
CBDC tokens can be purchased through mobile application.
I know how to protect myself from risk such as phishing, spyware and other risks while using CBDC transaction.
I never share username, password or PIN with anyone.
TrustThe CBDC mobile application is trustworthy.(Belanche et al., 2012; Mehrabian et al., 2024)
The CBDC mobile application is honest and truthful.
The CBDC mobile application can be trusted.
I feel assured that legal and technological structures adequately protect me from problems on the internet.
Behavioral IntentionI am willing to accept CBDC payment in my day-to-day consumption. (Jariyapan et al., 2022)
I plan to accept CBDC payment for all product purchases in my daily life.
I intend to use CBDC payment for all product purchases in the future.
I am willing to use CBDC as a means of payment for all my purchases in the future.
Table 2. Model Fitness.
Table 2. Model Fitness.
Fit IndexValueThreshold Limit
Average path coefficient (APC)0.290p < 0.001
Average R-squared (ARS)0.281p < 0.001
Average adjusted R-squared (AARS)1.122p < 0.001
Average block VIF (AVIF)1.624acceptable if ≤5, ideally ≤3.3
Average full collinearity VIF (AFVIF)1.683acceptable if ≤5, ideally ≤3.3
Tenenhaus GoF (GoF)0.445small ≥ 0.1, medium ≥ 0.25, large ≥ 0.36
Simpson’s paradox ratio (SPR)1.000acceptable if ≥0.7, ideally = 1
R-squared contribution ratio (RSCR)1.000acceptable if ≥0.9, ideally = 1
Statistical suppression ratio (SSR)1.000acceptable if ≥0.7
Nonlinear bivariate causality direction ratio (NLBCDR)1.000acceptable if ≥0.7
Table 3. Correlation Table.
Table 3. Correlation Table.
12345MeanSD
1. Age1 1.930.99
2. Gender−0.163 *1 NANA
3. Financial Literacy0.134 *0.0421 3.760.72
4. Trust0.038−0.0080.159 *1 15.353.03
5. Behavioral Intention0.038−0.0080.159 *1.000 **115.353.04
*. Correlation is significant at the 0.05 level (2-tailed). **. Correlation is significant at the 0.01 level (2-tailed); NA—Not Applicable
Table 4. Convergent and Discriminant Validity of measures.
Table 4. Convergent and Discriminant Validity of measures.
ConstructsTypeCRCronbachAVEVIF
1. TrustReflective0.8290.7240.5492.133
2. Financial LiteracyReflective0.8170.70.531.276
3. Behavioral IntentionReflective0.9170.8790.7341.834
Table 5. Interaction between Trust and Financial Literacy on Behavioral Intention to use CBDC.
Table 5. Interaction between Trust and Financial Literacy on Behavioral Intention to use CBDC.
PredictorBetaSEtpLLCIULCI
Constant−3.62171.0198−3.55150.0005−5.6307−1.6128
Financial Literacy1.26340.31284.03850.00010.64711.8797
Trust1.95540.24897.85690.00011.46512.4457
Financial Literacy × Trust−0.33350.0746−4.47170.0001−0.4804−0.1866
Dependent variable: behavioral intention to use CBDC.
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MDPI and ACS Style

Palanisamy, M.; Paul Vincent, M.T.; Hossain, M.B. Financial Literacy and Behavioral Intention to Use Central Banks’ Digital Currency: Moderating Role of Trust. J. Risk Financial Manag. 2025, 18, 165. https://doi.org/10.3390/jrfm18030165

AMA Style

Palanisamy M, Paul Vincent MT, Hossain MB. Financial Literacy and Behavioral Intention to Use Central Banks’ Digital Currency: Moderating Role of Trust. Journal of Risk and Financial Management. 2025; 18(3):165. https://doi.org/10.3390/jrfm18030165

Chicago/Turabian Style

Palanisamy, Mohanamani, Maria Tresita Paul Vincent, and Md Billal Hossain. 2025. "Financial Literacy and Behavioral Intention to Use Central Banks’ Digital Currency: Moderating Role of Trust" Journal of Risk and Financial Management 18, no. 3: 165. https://doi.org/10.3390/jrfm18030165

APA Style

Palanisamy, M., Paul Vincent, M. T., & Hossain, M. B. (2025). Financial Literacy and Behavioral Intention to Use Central Banks’ Digital Currency: Moderating Role of Trust. Journal of Risk and Financial Management, 18(3), 165. https://doi.org/10.3390/jrfm18030165

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