## PICTURE THIS — THE ASCENT OF CBDCs

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**Canonical URL:** [PICTURE THIS — THE ASCENT OF CBDCs](https://www.imf.org/-/media/files/publications/fandd/article/2022/september/ja/picturethis-j.pdf)

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### Overview
- Central bank digital currencies (CBDCs) are digital versions of cash that are issued and regulated by central banks.
- CBDCs are described as more secure and inherently not volatile, unlike crypto assets.
- Research into CBDCs has proliferated recently due to technological advances and a decline in the use of cash.
- More than half of the world’s central banks are exploring or developing digital currencies.

### History and adoption
- CBDCs have been around for three decades.
- In 1993, the Bank of Finland launched the Avant smart card, an electronic form of cash; the system was eventually dropped in the early 2000s and is considered the world’s first CBDC.
- As of July 2022, there were nearly 100 CBDCs in research or development stages and two fully launched: the eNaira in Nigeria, which was launched last year, and the Bahamian sand dollar, which made its debut in October 2020.

### Motivations and potential benefits
- Primary motives vary by country; for the Bahamas, serving unbanked and underbanked populations across more than 30 of its inhabited islands was a primary driving force.
- Potential benefits identified:
  - Promote financial inclusion.
  - Create greater resilience for domestic payment systems.
  - Foster more competition, which may lead to better access to money.
  - Increase efficiency in payments and lower transaction costs.
  - Improve transparency in money flows.
  - Could help reduce currency substitution.

### Risks and considerations for central banks
- Central banks must determine whether there is a compelling case to adopt CBDCs in their jurisdictions, including whether there will be sufficient demand.
- Some central banks have decided there is not a compelling case, at least for now; many are still grappling with the question.
- Key risks to manage:
  - Users might withdraw too much money from banks all at once to purchase CBDCs, which could trigger a crisis.
  - Exposure to cyberattacks and the need to manage cyber risk.
  - Ensuring data privacy and financial integrity.

### Key statistics and page visuals
- Timeline and numeric labels visible on the page: 0, 20, 40, 60, 80, 100.
- Years shown: 2014 2015 2016 2017 2018 2019 2020 2021 2022.
- Prominent numeric values on the visual: 97, 39, 19.
- Page and publication identifiers visible: 48, 49 (page layout numbers); FINANCE & DEVELOPMENT | September 2022.

*Finance & Development, September 2022.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2022/september/ja/picturethis-j.pdf_