Monetary Modernization and Sustainable Currency Innovation: The Future of Banknotes in the Era of Digital Transformation under Oman’s Vision 2040

Abstract

The traditional role of central banks is changing because of the significant transformation of global monetary systems brought about by digital innovation and sustainability imperatives. To position currency material innovation as a strategic tool of sustainable and digitally enabled monetary policy, this study looks at monetary modernization through the shift from cotton-based to polymer banknotes. This study examines how the Central Bank of Oman incorporates currency redesign with the innovation, green economy, and digital transformation pillars of Oman Vision 2040, using Oman's recent polymer banknote initiative as a case study. This study creates a conceptual framework that connects polymer currency with operational effectiveness, environmental sustainability, and future-ready monetary infrastructure by utilizing policy analysis and global best practices. The results demonstrate how polymer banknotes support resilient financial systems, sustainable finance, and technological readiness. By redefining physical currency as a catalyst for sustainable economic and environmental transformation, the study offers novel insights.