## CFMs in the Digital Age (2): Design Choices for CBDC (ftnea2023009) ## Source details **Canonical URL:** [CFMs in the Digital Age (2): Design Choices for CBDC (ftnea2023009)](https://www.imf.org/-/media/files/publications/ftn063/2023/english/ftnea2023009.pdf) ## Other formats - [Markdown version](/-/media/files/publications/ftn063/2023/english/ftnea2023009.pdf.md) - [Structured JSON version](/-/media/files/publications/ftn063/2023/english/ftnea2023009.pdf.json) --- ### Overview - CBDC definition and types: - CBDC is a digital liability of the central bank that can be a retail CBDC (accessible by the general public) or a wholesale CBDC (accessible only by selected financial institutions for large value payments). - Intended objectives of CBDC issuance: - access to payments and financial inclusion, - payment system competition, efficiency, and resilience, - preservation of demand for central bank money to safeguard monetary sovereignty and monetary policy effectiveness. - Cross-border potential: - CBDC is increasingly considered to enhance cross-border payments and transfers by increasing speed and decreasing costs relative to traditional rails. ### Key findings on CFMs and CBDC - Purpose and forms of CFMs: - CFMs limit risks from sudden and volatile capital flows and can take the form of authorization requirements, taxes, fees, or quantity limits on capital inflows or outflows. - CFMs are implemented to contain financial sector vulnerabilities, manage the exchange rate, stabilize macroeconomic conditions, avoid large external imbalances, and respond to large economic shocks or crises. - Drawbacks of CFMs: - potential resource misallocation and hindering needed macroeconomic adjustment. - IMF stance: - The IMF’s “Institutional View” (IMF 2012, 2022) treats CFMs as appropriate only under certain circumstances and only if they do not substitute for warranted macroeconomic adjustment. - Enforcement in the traditional system: - CFMs are enforced by commercial banks and regulated financial service providers that collect information (e.g., ultimate beneficiary, transaction purpose) and apply CFMs under supervision of the foreign exchange authority, typically the central bank. ### How CFMs interact with CBDC ecosystems - CBDC stack and implementation choices: - The CBDC ecosystem is a stack of technical functionalities (user interface, technology architecture, platforms connecting CBDC with foreign currencies); each level can implement CFMs with distinct trade-offs. - Two key CFM characteristics that determine implementation: - Information requirements (example: prohibiting the purchase of more than 1 million dollars of foreign assets per transaction vs. prohibiting 1 million dollars per person per year for a specific purpose). - Flexibility and speed (CFMs may need rapid implementation or to be relaxed over time). - Taxonomy guidance: - CFMs requiring large information sets or rapid implementation are preferably implemented at the technology architecture level (the CBDC “engine”), likely under central bank control. - CFMs with minor information needs and lower circumvention risk can be implemented at the user interface level (front-end dashboards). - For foreign CBDC circulating domestically, domestic authorities can regulate providers of the foreign CBDC’s user interface or request issuing foreign central banks to implement CFMs on the foreign CBDC. - Interconnected multilateral platforms may help when issuing central banks are unwilling to implement CFMs for foreign CBDC. ### Advantages and risks of “smart CFMs” enabled by CBDC - Advantages: - Programmability enables “smart CFMs” that can be more efficient and effective than traditional measures. - Smart CFMs could lower costs of monitoring, compliance, disclosure, and leakages. - Risks and trade-offs: - Operational risks: software bugs, outages, cyber resilience concerns. - Governance challenges: clear assignment of powers, rights, and responsibilities required for self-executing measures. - Privacy concerns: implementation requires extensive information and possibly data repositories owned by central banks or intermediaries; overly intrusive controls could push users to less regulated alternatives. - Legal/regulatory adaptation: smart CFMs do not replace foreign exchange legislation; legal basis for self-executing measures needs detailed analysis. - Coexistence with traditional rails: CFMs on CBDC must operate alongside CFMs applied to other channels to avoid loopholes. - If CBDC cannot be used directly for cross-border transfers, correspondent banking CFMs may remain operative. ### Policy implications and design recommendations - Design principles: - CBDC ecosystems should be designed from the outset to accommodate the possibility of CFMs (consistent with the IMF’s Institutional View or stricter international agreements). - Design choices should consider which CBDC layer (user interface, platform, technology architecture) best satisfies information and speed requirements. - Trade-offs between central bank control (favoring architecture-level implementation) and reliance on regulated intermediaries or foreign issuing central banks (user-interface or platform-level) must be assessed. - Coordination and cooperation: - Central banks need to collaborate on practices and standards for CFMs implemented via CBDC, especially when foreign CBDC circulates domestically. - Absent cooperation, domestic authorities may rely on on- and off-ramps to foreign CBDC or resort to restrictive measures (for example, banning access to foreign CBDC wallets), both of which have limited effectiveness or high costs. - Consistency across rails: - Streamlining CFMs so they can be applied both in digital and traditional forms may be necessary to track transactions across systems and prevent leakages. - Operational-resilience balance: - Some central banks may choose to forego programmability to avoid complexities; in such cases, CFMs may need alternative implementation channels. ### Open issues and areas for further analysis - Legal framework: - Whether legal frameworks need changes if central banks program smart CFMs; liability questions if user-interface providers write incorrect smart CFMs; roles and responsibilities for each party. - Privacy-preserving technologies: - Zero-knowledge proofs and similar technologies could reconcile privacy protection with informational needs of CFMs; further research warranted. - Operational risk management: - Detailed exploration required on software bugs, outages, cyber resilience, contingency planning, and testing. - Scope limitations: - Analysis focuses on CFMs implemented on the “cash leg” (payments/transfers). CFMs targeting securities transactions (“securities leg”) or tokenization of assets are outside scope and require separate analysis. ### CBDC implementation levels and CFMs (Levels 1–3) - Level 1 — User interface (digital wallets, smart cards, web interfaces, wearables): - Interface providers could implement CFMs per central bank requirements; central bank should have oversight capacity. - Suitable for CFMs with basic information needs and lower speed criticality (flows and some transaction-purpose CFMs). - Private providers may lack capacity for very rapid implementation. - Level 2 — CBDC architecture (ledger and application stack under central bank control): - Central bank has complete control; preferable for CFMs requiring large information sets and quick implementation. - Central bank typically best positioned to host databases about stock information (e.g., historical transfers). - Level 3 — Cross-border platform connecting CBDC rails/payment systems: - Similar benefits/drawbacks to architecture level; platform-level CFMs can apply across all participating foreign currencies. - Effective implementation depends on platform governance and compliance with national data-use laws. ### Information collection, storage, and efficiency principle - Required information: - Transaction purpose, identity, cumulated amounts over time, balance sheet information. - Collection modalities: - If CFMs are applied at the user interface, information can be collected and used directly; otherwise, information must be passed to enforcement levels if legally permitted. - Digitization of supporting documents (scanning, optical character recognition) supports algorithmic checks; standards for native digital documents recommended. - Centralized databases for historical transfers enable aggregation for stock CFMs. - Efficiency principle: - Collect required information at the level CFMs are implemented to avoid inefficiencies; exceptions include cross-border data-protection compliance or minimal-information CFMs implemented at the interface level. - Analytical assumption: - Subsequent analysis assumes all information needed for smart CFMs is available at the implementation level, regardless of collection/storage method. ### Modalities for cross-border transactions and channels - Domestic CBDC used to acquire foreign assets (three channels): 1. Correspondent banking: transfer CBDC to domestic bank, buy foreign exchange, transfer via correspondent banking to acquire foreign assets. 2. Direct transfer to a foreign entity (if domestic CBDC can be accessed/held by foreign entities). 3. Multilateral cross-border platforms connecting CBDC systems. - Foreign CBDC accessed by domestic entities (three channels): 1. Through domestic banks and licensed domestic digital wallets that have access to the foreign CBDC. 2. Correspondent banking if foreign CBDC accessible only from foreign payment systems. 3. Multilateral cross-border platforms. - Enforcement implications: - Implementing CFMs on domestic CBDC enforces measures across all channels and currencies. - Implementing CFMs on foreign CBDC enforces measures only on that currency and can suffer scalability issues. ### Case analysis for CFMs on foreign CBDC - Case 1 — Foreign CBDC can circulate in recipient country: - Domestic authority options: - Regulate digital wallet providers operating domestically (if licensed and supervised). - Cooperate with the foreign central bank to implement CFMs on the foreign CBDC architecture. - Cooperation constraints: - Requires foreign CBDC architecture to support third-country CFMs and data collection/sharing consistent with domestic law. - Costs for foreign central bank to implement CFMs may require cost-sharing agreements. - Scalability: implementing CFMs across many foreign CBDCs can be costly and complex. - Case 2 — Foreign CBDC cannot circulate domestically but can be accessed by domestic entities: - Options: - Work through the foreign CBDC-issuing central bank. - Leverage traditional CFMs on on-ramps/off-ramps via domestic intermediaries (enforcement challenges similar to CFMs on crypto assets). - Use a multilateral cross-border platform where CFMs apply across connected foreign CBDCs without bilateral agreements. - Legal and governance prerequisites: - Domestic laws and platform governance must permit implementation of CFMs. ### Efficiency and cost considerations; hybrid solutions - Cost implications: - Architecture-level implementation implies central bank must hire staff to develop, test, monitor, update, and deploy CFMs in addition to maintaining capacity for traditional CFMs. - Central bank may bear costs or apply cost-recovery; costs may be externalized when CFMs are applied at the user interface or platform levels but require supervision. - Hybrid approaches: - Private providers implement CFMs with low information requirements and low macro-criticality at the user interface level; central bank retains direct control for time-critical/information-intensive CFMs at the architecture level. - Preprogramming macro-critical CFMs can enable rapid deployment. - Short-term vs long-term dynamics: - Short-term central bank costs may increase due to coexistence of smart and traditional CFMs. - Long-term: greater CBDC adoption for international transfers could reduce overall CFM implementation costs as volumes concentrate in CBDC-based systems. ### Project Inthanon-LionRock — proof of concept and lessons - Overview: - Joint initiative between the Bank of Thailand and the Hong Kong Monetary Authority in 2019 developing a wholesale CBDC corridor network connecting Thailand and Hong Kong payment networks. - Enabled instantaneous peer-to-peer funds transfers, on-demand FX conversion, atomic PvP FX settlements, liquidity management, and regulatory monitoring where feasible. - Thailand CFM test: - Nonresidents were prohibited from having an aggregated outstanding balance of 200 million THB across all accounts held with banks in Thailand at the end of each day. - If the limit is breached, domestic bank must notify the nonresident to sell excess THB at an exchange rate specified by the Bank of Thailand. - Implementation in the corridor: - User interface: Hong Kong banks’ outstanding THB balance on-corridor and off-corridor were aggregated daily; system flagged exceedances of 200 million THB. - Architecture: automated reduction mechanism to reduce end-of-day THB balances on the corridor by selling excess THB to the operator node at a specified exchange rate. - Achievements and limitations: - Demonstrated embedding CFMs into a cross-border CBDC platform but did not handle nuanced exemptions (for trade/investment uses eligible for next-business-day exemption). - Trade-off between corridor efficiency and full regulatory compliance noted; potential need to revise monitoring or adjust CFMs for dynamic corridor transactions. ### Enforcement challenges with traditional CFMs (Box 3) - Common enforcement shortcomings: - Lack of experience, weak legal powers, insufficient data collection and verification, weak monitoring and supervision capacity. - Corruption, limited credibility, and poor communication can facilitate circumvention. - Countries new to CFMs face greater challenges; those with longstanding CFMs have infrastructure but may still face chronic implementation issues. - Verification and supervision: - Regulated intermediaries typically verify transactions and required documentation; central bank monitors compliance via off-site monitoring and on-site inspections. - Verification procedures include checking counterparties, purpose, limits, and authorization requirements. ### Smart CFMs: enforcement advantages and coexistence issues - Enforcement advantages: - Smart CFMs can be embedded in CBDC design, making verification and monitoring more efficient and enabling composability and conditional execution. - Automation reduces human errors, scales monitoring, and can reduce ex-post supervision costs. - Coexistence and consistency: - CBDC rails complement traditional correspondent banking; CFMs must be applied consistently across rails to avoid loopholes. - For CFMs on stocks, aggregate information across rails must be accessible to all agents implementing CFMs, including private intermediaries and those overseeing crypto-asset CFMs. - Streamlining CFMs or moving from discretionary to rules-based CFMs "as much as is feasible" may be needed to capture benefits of digital implementation. - Faster cross-border payments (24/7) may require redesign of certain CFMs (for example, CFMs based on overnight restrictions). ### Risks, trade-offs, and capacity needs - Adoption and design choices: - CFMs that introduce limits and constraints could reduce CBDC attractiveness; some central banks may choose to avoid programmability. - Smart CFMs shift compliance burden to private firms (user-interface providers) if implemented at that level; compliance costs may be higher for smaller intermediaries and raise barriers to entry. - Privacy trade-offs: - Cross-border CFMs may require information beyond AML/CFT checks and centralized storage, raising privacy concerns unless protections are in place. - Privacy-preserving technologies could improve trade-offs if they allow regulator transparency under specified legal conditions. - Capacity and operational requirements: - Central banks need expanded capacity to deploy/oversee smart CFMs and monitor real-time data. - Emerging market and developing economy central banks may face more acute capacity challenges. - Operational risks include outages, cyberattacks, technology obsolescence, programming errors, and document-digitalization pitfalls. - Contingency plans, regular review, and testing are required. ### Conclusions and directions for future work - Summary conclusion: - CBDC enables opportunities to implement CFMs more efficiently through programmability, but introduces legal, privacy, operational, and coordination challenges. - Careful CBDC design anticipating CFMs, collaboration among central banks, and coherent treatment of digital and traditional CFMs are necessary to preserve policy effectiveness while harnessing CBDC benefits. - Research agenda: - Explore trade-offs between programmability and efficiency without excessive distortion. - Address legal and operational questions: legal frameworks for smart CFMs, liability allocation, roles and responsibilities, algorithm mechanics, preprogramming for rapid deployment, and international cooperation mechanisms. - Extend analysis to tokenized assets where information can be attached to tokens, widening potential scope and speed of enforcement. *INTERNATIONAL MONETARY FUND — CFMs in the Digital Age (2): Design Choices for CBDC (ftnea2023009).* ### Introduction and Summary of Findings ................................................................................... ### Introduction and Summary of Findings ### Overview - CBDC (central bank digital currency) is a digital liability of the central bank that can be: - a retail CBDC (accessible by the general public), or - a wholesale CBDC (accessible only by selected financial institutions for large value payments). - CBDC issuance is generally intended to promote: - access to payments and financial inclusion, - payment system competition, efficiency, and resilience, - preservation of demand for central bank money to safeguard monetary sovereignty and monetary policy effectiveness. - CBDC is increasingly considered to enhance cross-border payments and transfers by increasing speed and decreasing costs relative to traditional rails. ### Key findings on CFMs and CBDC - Capital flow management measures (CFMs) are used by many IMF member countries to limit risks from sudden and volatile capital flows and can take forms such as authorization requirements, taxes, fees, or quantity limits on capital inflows or outflows. - CFMs are implemented to: - contain financial sector vulnerabilities, - manage the exchange rate, - stabilize macroeconomic conditions, - avoid large external imbalances, - respond to large economic shocks or crises. - CFMs also have disadvantages, including potential resource misallocation and hindering needed macroeconomic adjustment. - The IMF’s “Institutional View” (IMF 2012, 2022) treats CFMs as appropriate only under certain circumstances and only if they do not substitute for warranted macroeconomic adjustment. - Traditional CFMs are enforced by commercial banks and regulated financial service providers that collect information (e.g., ultimate beneficiary, transaction purpose) and apply CFMs under supervision of the foreign exchange authority, typically the central bank. ### How CFMs interact with CBDC ecosystems - The CBDC ecosystem can be viewed as a stack of technical functionalities (user interface, technology architecture, platforms connecting CBDC with foreign currencies), each level potentially usable to implement CFMs with distinct trade-offs. - Two key CFM characteristics that influence implementation choices: - Information requirements: e.g., prohibiting the purchase of more than 1 million dollars of foreign assets per transaction requires less information than prohibiting the purchase of 1 million dollars of foreign assets by the same person, each year, for a specific purpose (the latter requires tracking all transactions within a year and their purposes). - Flexibility and speed: CFMs may need to be relaxed over time or implemented quickly during crises. - Taxonomy and implementation guidance: - CFMs that require a large amount of information or fast implementation are preferably implemented at the technology architecture level (the CBDC “engine”), likely under central bank control. - CFMs with minor information requirements and lower risk if circumvented could be implemented at the user interface level (front-end dashboards). - In cases of foreign CBDC circulating domestically, domestic authorities can: - regulate providers of the foreign CBDC’s user interface, or - request issuing foreign central banks to implement CFMs on the foreign CBDC (which could impose additional design and implementation costs on issuing central banks). - Interconnected multilateral platforms may help when issuing central banks are unwilling to shoulder the burden of implementing CFMs on foreign CBDC. ### Advantages and risks of “smart CFMs” enabled by CBDC - Advantages: - Programmability of payment infrastructure can enable “smart CFMs” that are more efficient and effective than traditional measures. - Smart CFMs could lower costs of monitoring, compliance, disclosure, and leakages. - Risks and trade-offs: - Automated smart CFMs raise operational risks (software bugs, outages, cyber resilience concerns) and governance challenges. - Privacy concerns: implementing CFMs requires extensive information and possibly data repositories owned by central banks or intermediaries; overly intrusive controls could push users to less regulated alternatives. - Legal and regulatory frameworks need adaptation: smart CFMs require clear assignment of powers, rights, and responsibilities for self-executing measures. - Coexistence with traditional rails: CFMs on CBDC must operate alongside CFMs applied to other channels (for example, correspondent banking) to avoid loopholes and preserve overall effectiveness. - If CBDC cannot be used directly for cross-border transfers, traditional CFMs implemented via correspondent banking could remain operative. ### Policy implications and design recommendations - CBDC ecosystems should be designed from the outset to accommodate the possibility of CFMs (consistent with the IMF’s Institutional View or stricter international agreements). - Design choices should consider: - Which CBDC layer (user interface, platform, technology architecture) can best satisfy information and speed requirements of the intended CFMs. - Trade-offs between central bank control (favoring technology architecture implementation) and reliance on regulated intermediaries or foreign issuing central banks (user interface or platform-level approaches). - Coordination and cooperation: - Central banks need to collaborate on practices and standards for CFMs implemented via CBDC, especially when foreign CBDC circulates domestically. - Absent cooperation, domestic authorities may rely on on- and off-ramps to foreign CBDC or resort to restrictive measures (for example, banning access to foreign CBDC wallets), both of which have limited effectiveness or high costs. - Maintain consistency across digital and traditional CFMs: - Streamlining CFMs so they can be applied both in digital and traditional forms may be necessary to track transactions across systems and prevent leakages. - Balance programmability benefits with operational resilience: - Some central banks may choose to forego programmability to avoid complexities; in such cases, CFMs may need to be implemented through other means. ### Open issues and areas for further analysis - Legal framework: - The legal basis for self-executing smart CFMs needs detailed analysis; smart CFMs do not replace foreign exchange legislation that governs cross-border CBDC use. - Privacy-preserving technologies: - Technologies such as zero-knowledge proofs could reconcile privacy protection with the informational needs of CFMs; further research is warranted. - Operational risk management: - Detailed exploration of software bugs, outages, cyber resilience, and contingency planning is required for operational implementations. - Scope limitations: - This analysis focuses on CFMs implemented on the “cash leg” of capital flows (payments/transfers). CFMs that target securities transactions (“securities leg”) or the tokenization of assets are outside the scope of this note and require separate analysis. ### Conclusion - CBDC offers opportunities to implement CFMs more efficiently through programmability, but doing so introduces legal, privacy, operational, and coordination challenges. - Careful CBDC design that anticipates potential CFMs, collaboration among central banks, and coherent treatment of digital and traditional CFMs will be necessary to preserve policy effectiveness while harnessing CBDC benefits. *INTERNATIONAL MONETARY FUND — Introduction and Summary of Findings.* ### Section III explores why CFMs can be more efficient and effective through CBDC. Section IV presents ### CFMs in the Digital Age (2): Design Choices for CBDC ### I. Key Characteristics of CFMs - Two characteristics important for CBDC implementation: - Implementation of CFMs requires information (e.g., type/identity of sender or receiver, purpose, other conditions). - CFMs often change over time and sometimes need to be implemented dynamically; design must be flexible and able to change quickly. - CFMs typically target three attributes of capital flows: - Flows: aim to curtail the size of any cross-border transfer regardless of sender/beneficiary or purpose; rudimentary and not frequently applied outside crisis periods. - Transaction purpose: allow transactions only with a certain purpose (e.g., inward foreign direct investment), often with limits or conditions. - Stocks: limit cumulative scale of cross-border transfers in a period (for instance, a yearly $1 million limit per resident) to ensure resilience to capital flow volatility. - Prevalence: the overwhelming majority of CFMs are of the transaction purpose type. - Information requirements by CFM type (from Table 1): - Flows: Transaction Size = X; Identity = X; Cumulated Flows = –; Payment Purpose = –; Balance Sheet Information = –. - Transaction Purpose: Transaction Size = X; Identity = X; Cumulated Flows = –; Payment Purpose = X; Balance Sheet Information = X. - Stocks: Transaction Size = X; Identity = X; Cumulated Flows = X; Payment Purpose = X; Balance Sheet Information = X. - CFMs may apply to payments in local currency between residents and nonresidents or to nonresidents’ holdings of domestic currency; these require information on flows, stocks, and transaction purpose. - CFMs and change: - CFMs tend to change due to moves toward openness or in response to shocks. - In crises, CFMs may need to be implemented rapidly (e.g., over a weekend or bank holiday). - CFMs that limit outflows or impose mandatory currency denomination requirements are often prioritized for speed/ease of modification. - Conceptual matrix of CFM characteristics: - CFMs are placed according to information needs and speed of implementation (high information + need for quick implementation in first quadrant; low information + no quick implementation in third quadrant). - The digital environment of CBDC allows different implementation options depending on these characteristics. ### II. How Can CFMs Be Implemented with CBDC? - Smart CFMs: - CFMs can be codified as “if ... then ... else” instructions and implemented as algorithms in CBDC design—referred to as “smart CFMs.” - Example algorithm for restricting residents’ investments abroad: 1. Check if payer is resident (specific type). 2. Check if counterparty is foreign; if so, request supporting documents (customs info, receipt). 3. Check supporting documentation; if requirements met, allow transfer; if not, block transfer. - Algorithms can represent discretionary CFMs by stopping and asking for authority intervention via web interface or by requiring prior authorization as supporting document. - Programmability and precedent: - Central banks have used programmability to control domestic CBDC wallet caps and transaction limits to prevent bank disintermediation or unmanageable deposit outflows; similar programmability can be applied to cross-border transactions (e.g., geofencing). - Distinction: programmable payments (conditionalities on payments) vs programmable money (conditionalities on the money token itself). Smart CFMs require programmability on payments, not on money, preserving fungibility. - Geofencing (Box 1 summary): - Methods: IP addresses, GPS location, connectivity provider; vulnerable to evasion via apps/services that modify IP/GPS. - Stronger localization: triangulation via mobile phone antennas or decentralized protocols using nearby information/devices. - Trade-off: choice of measures depends on CBDC scheme and policy priorities; measures may be combined. - Modalities for acquiring foreign assets through CBDC: - Domestic CBDC used to acquire foreign assets (three channels): 1. Correspondent banking: transfer CBDC to domestic bank, buy foreign exchange, transfer through correspondent banking to acquire foreign assets. 2. Direct transfer to a foreign entity (if domestic CBDC can be accessed/held by foreign entities): domestic CBDC transferred to foreign entity in exchange for foreign asset. 3. Multilateral cross-border platforms: domestic CBDC connected to foreign payment systems via platform; obtain foreign assets via intermediaries on platform. - Foreign CBDC accessed by domestic entities (three channels): 1. Through domestic banks and licensed domestic digital wallets if they have access to the foreign CBDC—transfer from domestic bank to wallet that holds the foreign CBDC. 2. Correspondent banking if foreign CBDC accessible only from foreign payment system—domestic entity goes through correspondent banking before acquiring foreign CBDC likely for foreign exchange. 3. Multilateral cross-border platforms. - Implementing CFMs on domestic CBDC enforces measures across all channels and currencies; implementing CFMs on foreign CBDC enforces measures only on that currency and can suffer scalability issues. - Footnote: Foreign assets defined here as any sort of assets denominated in a foreign currency, issued by nonresidents, and originated abroad (including foreign exchange deposits with offshore foreign banks). - Implementation levels in the CBDC ecosystem (Figure 2 summary): - Level 1: User interface (digital wallets, smart cards, web interfaces, wearables). Interface providers (typically payment service providers in two-tiered CBDC systems) could implement CFMs per central bank requirements; central bank should have oversight capacity. Central bank could also build/provide the interface directly or via third party. - Level 2: CBDC architecture (ledger and application stack under central bank control). Central bank should have complete control; smart CFMs can be programmed here by the central bank or vendor. - Level 3: Cross-border platform connecting CBDC rails/payment systems of different countries. For wholesale cross-border CBDC, platform and architecture may coincide; platform governance must allow smart CFMs to be applied automatically for originating-country transactions. - Collection and storage of information for CFMs: - Required information includes transaction purpose and cumulative amounts over time. - If CFMs applied at user interface level, required information can be used directly by implementing code; otherwise information must be passed to other enforcement levels if laws allow. - Central bank could collect required information directly via a web interface; unique identifier for cross-border transfer could be associated with information requests. - Digitization of supporting documentation via scanning and optical character recognition allows algorithmic cross-checks of amount, destination, and nature of goods; standards for native digital documents and checking their truthfulness advisable long term. - Information on past transfers can be collected per transaction or stored in a central database containing cross-border flows across different rails to compute cumulative flows by entity. - Efficiency principle: collect required information at the same level CFMs are implemented to avoid loss of efficiency from passing data between levels—exceptions include: - Collecting and storing data domestically even if CFMs enforced at cross-border platform level for data protection/privacy compliance. - When information needs are minimal (e.g., CFMs on flows), collecting at user interface level may be simpler even if enforcement is at architecture level. - In subsequent discussion, assumption: all information needed for smart CFMs is available at the implementation level, regardless of collection/storage method. - Cases analyzed: - Case 1: Domestic CBDC used to initiate foreign assets transactions—central bank chooses implementation level (1, 2, or 3) guided by CFM characteristics defined in Section I. - Case 2: Foreign CBDC accessible by domestic entities—domestic authority needs to implement controls on capital flow to/from foreign CBDC (implementation and enforcement implications differ; see above modalities and scalability note). *Source: FINTECH NOTES — CFMs in the Digital Age (2): Design Choices for CBDC, International Monetary Fund* ### 3. The efficiency trade-offs between the three levels are then discussed. ### 3. The efficiency trade-offs between the three levels are then discussed. ### CBDC implementation levels and CFM roles - When the central bank implements the CFMs directly at the CBDC architecture level: - The central bank fulfills roles of both designer and enforcer of CFMs. - This level is preferable for CFMs that require a large amount of information and need quick implementation. - Direct control allows relatively faster implementation of CFMs if needed. - The central bank is typically in the best position to host the database about stock information (for example, who has transferred which amounts in the past, meeting a holding period requirement). - Applying CFMs at the user interface level: - Works effectively for CFMs that require only basic information and for which rapid updates and implementation are not critical. - Works well for CFMs on flows and certain transaction-purpose CFMs because this information can likely be directly obtained from the user through the interface. - Information on stocks needs to be aggregated with other information on flows through other channels and likely resides outside of the user interface. - Private companies providing the user interface might not have the resources to implement CFMs in a very short time. - Implementing CFMs at the cross-border platform level: - Benefits and drawbacks are broadly similar to the CBDC architecture level, with key specificities. - Key advantage: CFMs applied on the platform would be implemented with respect to all foreign currencies participating in the platform—relevant when domestic authorities try to limit access to foreign CBDC. - Ability of central banks to implement CFMs in multilateral platforms depends on platform governance to establish roles, procedures, and responsibilities. - Compliance with national laws on data use and storage must be ensured. ### Efficiency and cost considerations - Implementing CFMs at the architecture level implies additional costs for the central bank because it needs to: - Hire and maintain staff to develop, test, monitor, update, and deploy CFMs in addition to maintaining capacity and staff to design, implement, and enforce traditional CFMs. - Cost allocation and externalization: - The central bank might decide to bear all costs for CFMs or apply a cost-recovery strategy. - Costs might be externalized if CFMs are applied at the user interface level or at the cross-border platform level, although the central bank would still need to supervise implementation. - For traditional CFMs, part of the cost of implementation is borne by intermediaries; costs borne by private providers could be transferred to users for the service of cross-border transfers. - Hybrid solutions: - Central banks may have private providers implement CFMs with low information requirements and low macro-criticality at the user interface level, while retaining direct control for time-critical and information-intensive CFMs at the CBDC architecture level. - To ensure quick implementation, the central bank might consider preprogramming macro-critical CFMs so that they can be deployed quickly. - Short-term vs long-term cost dynamics: - Even if smart CFMs enable higher efficiency and better control, central bank costs might increase in the short term because smart and traditional CFMs will co-exist. - In the long run, domestic entities might increasingly use the CBDC system for international transfers if the costs are lower than in the traditional system. - Larger volumes through the CBDC-based system could reduce overall costs of CFM implementation over time. ### CFMs on foreign CBDC: two cases and implementation channels - Case 1 — Foreign CBDC can circulate in a recipient country: - Domestic authorities have limited opportunities to implement and enforce the country’s CFMs on the foreign CBDC. - Possible implementation channels: - Through digital wallet providers operating in the country (subject to domestic licensing and supervision). - If the issuer of the digital wallet is licensed and supervised by the domestic central bank, the central bank could require applying CFMs at the user interface level. - If the provider is not regulated by the domestic authority, the domestic central bank will need assistance from the foreign regulator of the digital wallets to request implementation of CFMs. - Through cooperation with the foreign central bank to implement CFMs directly on the foreign CBDC architecture level. - Requires the foreign CBDC architecture to be designed so CFMs of other countries can be implemented on cross-border flows, including information collection on identity, purposes, or stock information of nonresident users. - Collection and sharing of such information must comply with both countries’ data-sharing laws. - Requires the foreign central bank’s willingness to implement or change CFMs, potentially swiftly, and for the requesting central bank to be able to oversee or verify ex-post compliance with domestic foreign exchange law. - Cooperation likelihood increases if both countries benefit from more stable capital flows and if there's a common understanding of macrofinancial risks. - Costs for the foreign central bank to implement CFMs may require agreements on cost-sharing. - Scalability issues: setting up CFMs for more than one foreign CBDC could be very costly and increase complexity for the issuing central bank; the domestic central bank would need to manage relations with several foreign central banks and verify implementation across multiple foreign CBDCs. - Case 2 — Foreign CBDC cannot circulate domestically but can be accessed by domestic entities: - Three broad options to implement CFMs: - Through the foreign CBDC-issuing central bank (as above). - Leverage traditional CFMs by imposing controls on on-ramp access to digital wallets or off-ramp when proceeds are converted into local currency through domestic financial intermediaries (challenges akin to CFMs on crypto assets, with potential enforcement limits). - Through a multilateral cross-border platform: - Key advantage: CFMs on the platform could be applied with respect to all foreign CBDCs (or foreign payment systems) connected through the platform, without bilateral agreements. - Domestic laws and platform governance must allow for implementation of CFMs. ### Project Inthanon-LionRock — proof of concept and lessons (Box 2) - Project overview: - Joint initiative between the Bank of Thailand and the Hong Kong Monetary Authority to explore distributed ledger technology and wholesale CBDC for cross-border transfers. - Conducted in 2019; developed a proof-of-concept “corridor network” connecting domestic wholesale CBDC payment networks of Thailand and Hong Kong, allowing instantaneous peer-to-peer funds transfers between participating banks. - Corridor enabled foreign exchange price discovery, on-demand foreign exchange conversion, atomic payment-versus-payment foreign exchange settlements, liquidity management, and regulatory monitoring and compliance features where feasible. - Thailand CFM considered in the proof of concept: - Nonresidents were prohibited from having an aggregated outstanding balance of 200 million THB across all accounts held with banks in Thailand at the end of each day. - If the limit is breached, the domestic bank must notify the nonresident to sell their excess THB at an exchange rate specified by the Bank of Thailand, akin to a penalty. - Implementation features in the corridor: - User interface level: Hong Kong banks’ outstanding THB balance in the corridor and off-corridor THB held with banks in Thailand were aggregated daily; the system would flag in red if the total exceeds 200 million THB to support surveillance and monitoring. - Architecture level: an automated reduction mechanism to reduce end-of-day THB balances on the corridor if aggregated holdings exceeded 200 million THB by selling excess THB to the operator node at a specified exchange rate. - Achievements and limitations: - Demonstrated the ability to embed CFMs into a cross-border CBDC platform, albeit with limitations. - An exemption existed in Thailand where nonresidents could exceed 200 million THB if funds were used for trade or investment in Thailand on the next business day; the proof of concept did not consider nuanced exemptions. - The project team noted potential need to modify the corridor model to fully comply with existing regulations, creating a trade-off between efficiency and regulatory compliance. - Alternatively, monitoring approaches may need revision or CFMs amended to accommodate dynamic corridor transactions. ### Can CBDC improve CFM implementation? (Efficiency, control, and technological frontier) - Potential efficiency gains from smart CFMs: - CBDC design can automate and increase efficiency of information processing involved in CFMs; smart CFMs can be more efficient than traditional CFMs for several reasons. - Key enabling factor: availability of digitalized information relevant for cross-border transfers (goods type, purpose of transaction, balance sheet information). - Digital information must be stored and protected in central repositories, either at the central bank or through private operators, and accessed when needed for implementation and oversight. - Digitalization can lead to more comprehensive and efficient information collection, storage, and use for CFM needs and can also improve efficiency of traditional CFMs. - Central bank can build controls directly within the CBDC system: - While fixed costs may be higher due to software development and maintenance, total enforcement costs for central banks could decrease because of reduced ex-post supervision costs. - Direct control allows better real-time monitoring of capital flows and triggering of CFMs only if aggregate flows reach certain thresholds. - Automation reduces scope of interpretation by financial intermediaries and manual/human errors, decreasing regulatory burden, risks, and costs on intermediaries and increasing compliance. - Limitations and institutional considerations: - Smart CFMs cannot be expected to overcome institutional weaknesses that fundamentally undermine CFM effectiveness. - Even if smart CFMs shift the technological frontier outward between efficiency and control, short-term central bank costs may rise due to coexistence with traditional CFMs. - In the long run, higher CBDC adoption for international transfers—if cost advantages materialize—could lead to lower overall costs of CFM implementation. *Source: FINTECH NOTES CFMs in the Digital Age (2): Design Choices for CBDC, INTERNATIONAL MONETARY FUND. ### Box 3. Imperfect Implementation of Traditional CFMs ### Box 3. Imperfect Implementation of Traditional CFMs ### Enforcement challenges with traditional CFMs - Enforcement challenges are common in the use of traditional CFMs and may reflect lack of experience with enforcing such measures; limitations regarding legal powers, data collection, and verification processes; and monitoring and supervision of capital flows. - Corruption, limited credibility, and poor communication may also play an important role. - Countries with limited experience with using CFMs generally face greater challenges and may need more time to prepare for their introduction; comprehensive outflow CFMs needed swiftly in the context of a (imminent) crisis are particularly challenging. - Countries with long-standing CFMs tend to have much of the needed infrastructure in place and can more easily introduce and enforce new CFMs, although they may also face chronic challenges in implementation. - Legal powers to use CFMs need to be accompanied by powers to collect information, ensure enforcement, and sanction noncompliance; powers to collect information from other than authorized dealers or to sanction their noncompliance may be weak. - Adequate verification processes are required, typically with authorized dealers checking whether each transaction should be authorized based on the existing CFMs. - The foreign exchange authority, typically the central bank, needs capacity to monitor verification processes, collect information efficiently, monitor and analyze capital flows in a timely manner, and identify and close loopholes. - Enforcement challenges can arise at the verification stage if authorized dealers are not effective or at the supervision and monitoring stage where capacity at the central bank is weak or interagency cooperation challenges are present (for example, between central banks and custom authorities). - Corruption can facilitate circumvention of CFMs and undermine their effectiveness. - Poorly communicated CFMs may leave room for interpretation and cause uneven enforcement across the economy, and lack of credibility of central banks may fuel circumvention. ### Smart CFMs and CBDC: potential enforcement advantages - Smart CFMs may assist with easing some of these enforcement challenges by operating through CBDCs rather than traditional routes. - Smart CFMs are an integral part of the CBDC design, and many aspects of their enforcement can be built into the process. - Transactions can be more efficiently verified and monitored and their associated information can be collected more efficiently, which could foster more effective supervision and use of CFMs. - Smart CFMs provide greater scope for composability, where several actions are brought together into one executable package, and actions can be made contingent on fulfilling certain conditions (that is, the CFMs). - Some countries already have efficient processes for traditional CFMs, including a high degree of automatization and sophisticated information collection systems; in other countries transactions are delayed to complete the verification process, which increases the cost of using traditional CFMs. ### Coexistence with other rails for cross-border payments - A cross-border system based on CBDC would constitute a new rail for international transfers, complementing the traditional correspondent banking system; traditional CFMs will continue to exist as long as traditional payment channels exist. - Implementations of CFMs on CBDC-based rails and traditional rails need to be working seamlessly to avoid loopholes. - For CFMs on stocks, information on the amount of foreign exchange acquired through the different rails needs to be accessible to all agents involved in CFMs implementation, including private intermediaries enforcing traditional CFMs; this information will also need to be shared with those implementing CFMs on crypto assets, if CFMs are imposed on crypto transactions. - CFMs should be applied consistently in their digital and traditional forms; implementation of smart CFMs might require streamlining CFMs or switching from discretionary CFMs to rules-based CFMs "as much as is feasible" to reap the full benefits of digital implementation and automation.25 - Faster cross-border payments might require changes in CFM design independently of how the CBDC landscape evolves; for instance, CFMs based on overnight restrictions (see Box 2) might not be well suited for a payment system intended to work 24/7. - Changes in CFM design might imply a loss of control for some types of transfers that could be offset by more efficient aggregate control through both traditional and digital CFMs; policymakers will need to carefully evaluate this trade-off. ### Issues related to cooperation between jurisdictions - Cooperation between jurisdictions would greatly facilitate appropriate management of capital flows with CBDC, but jurisdictions issuing a CBDC might be unwilling or unable to cooperate in ensuring that CFMs of a foreign country are enabled. - A jurisdiction might desire its CBDC to circulate outside its jurisdiction or have little interest in implementing CFMs of other jurisdictions. - Recipient countries may find a foreign CBDC accessible to residents without the possibility to implement CFMs on the foreign CBDC or its user interface providers; policy options include exploiting on-ramp and off-ramp access through financial intermediaries relying on traditional CFMs (applying when there is conversion between the local currency and the foreign CBDC) or considering how to block or severely restrict resident access to the foreign CBDC. - Similar challenges arise with crypto assets, though risks from domestic circulation of crypto assets may differ from risks of foreign CBDC circulation. - Recipient countries can regulate payment service providers and financial institutions, impose restrictions, or ban access to specific CBDCs within their jurisdiction, but restricting access to digital interfaces may be more challenging given cross-border availability of applications.26 - Policymakers must balance macroeconomic trade-offs of allowing a foreign currency to circulate domestically; unrestricted domestic circulation of foreign CBDC could lead to currency substitution.27 ### Managing risks and trade-offs arising from CBDC and CFMs - Adoption of CBDC is not guaranteed; potential users must find CBDC design features attractive and useful, but CFMs that introduce limits and constraints could reduce overall attractiveness. - Some central banks may avoid programmable functionalities in CBDC design, fearing they may impede universality of currency; alternatives without such constraints, including potentially unregulated crypto assets, could attract users and undermine CFM implementation. - Smart CFMs shift burden from financial intermediaries (traditional CFMs) to private firms in the CBDC ecosystem; if implemented at the user-interface level, regulatory burden and costs may increase for private firms, especially if they must continue implementing traditional CFMs. - Costs of programming and compliance will be relatively higher for smaller financial intermediaries, potentially raising barriers to entry and hampering competition in the CBDC payment market. - There is a policy trade-off between reducing risks from capital flow volatility and improving competition in the domestic payments system. - Privacy concerns create another trade-off: implementing CFMs in cross-border transactions may require information beyond AML/CFT checks and storing information in central bank or intermediary repositories could impinge on privacy in the absence of proper protections. - If CFM controls are perceived as overly intrusive on privacy, users may opt out of CBDC for cross-border transfers, pushing usage toward less regulated alternatives. - Privacy-preserving technologies, such as zero-knowledge proofs, could potentially improve the trade-off, provided they allow transparency to regulators under certain conditions specified by law. ### Capacity and operational requirements - Smart CFMs would generally require an expansion of capacity for central banks: building know-how and capacity to deploy or oversee smart CFMs and to monitor real-time data generated by CBDC, especially if CFMs link to real-time flow data. - Capacity must be commensurate with the need for quick implementation of CFMs; capacity requirements may be more challenging for central banks in emerging markets and developing economies where knowledge of new technologies may not be widespread and CFMs may not be adaptable enough to benefit from automation. - Operational risks from embedding CFMs in CBDC design include management of outages, cyber resilience, technology obsolescence, and increased complexity of CBDC systems. - Smart CFMs reduce risks linked to human interventions (slow processes, inability to scale, human mistakes) but introduce risks from programming or logic errors; poorly algorithm-suited CFMs can create loopholes or cause unintentional blocking of transactions. - Digitalization of supporting documentation might create operational risks if documents are not recognized by the system; examples include (1) valid documents not accepted due to format issues and (2) special cases preventing users from producing complete required documentation, effectively excluding users from service.28 - A central database for CFMs might be exposed to cyberattacks; roles and responsibilities need clear definition when third-party providers are involved. - Contingency plans for pitfalls in implementation and execution of smart CFMs need to be prepared, reviewed, and tested regularly. ### Conclusion and directions for future work - Many IMF member countries rely on CFMs to limit risks from sudden and volatile capital flows; the IMF’s Institutional View considers CFMs appropriate only under certain circumstances and only if they do not substitute for warranted macroeconomic adjustment. - The Fintech note analyzes the possibility of implementing CFMs on a CBDC and shows that, by exploiting automation and digitalization of information, CFMs can be implemented within a CBDC ecosystem at different levels; depending on design, smart CFMs could potentially improve efficiency and effectiveness of CFM implementation. - This work is the first to address embedding CFMs in CBDC design; future work needs to explore trade-offs between making CFMs more programmable and their ability to restrict targeted flows efficiently without resulting in more distortion than traditional CFMs. - Important legal and operational questions remain, including: whether legal frameworks need changes if central banks program smart CFMs; liability if smart CFMs written by user interface providers are incorrect; roles and responsibilities of each party; the mechanics of algorithm design and whether smart CFMs can be preprogrammed for quick implementation; and how central banks can cooperate to ensure implementation of CFMs on a foreign CBDC. - Development of CFMs in the digital age could extend beyond CBDC to tokenized assets, where information can be attached to the token itself and could pertain to attributes of capital flows needed for CFMs, potentially widening the scope and speed of enforcement; these topics are left for future research. *Source: ftnea2023009 - Box 3. Imperfect Implementation of Traditional CFMs* ### Annex I: Overview of CFMs ### Annex I: Overview of CFMs ### Definition of CFMs - CFMs are measures that are designed to limit capital flows. - CFMs may encompass a wide range of diverse measures (including taxes and regulations) that often have country-specific characteristics reflecting countries’ institutional arrangements, level of economic development, and exposure to capital flow volatility. - CFMs comprise: - (1) residency-based measures (often referred to as capital controls), which affect cross-border financial activity and discriminate based on the residency of transacting parties (that is, between residents and nonresidents); and - (2) other CFMs, which do not discriminate by residency but are nonetheless designed to limit capital flows based on an evaluation of the context in which they were introduced and the totality of the country-specific circumstances. - This definition of CFMs is set out in the IMF’s Institutional View on the Liberalization and Management of Capital Flows (IMF 2012, 2022). ### Legal and institutional context - Under the IMF’s Articles of Agreement, countries have broad freedom to regulate international capital movements, with a few exceptions. - The IMF may request a country to impose CFMs pursuant to Article VI of the Articles of Agreement. ### Role of CFMs - Broad trend: There has been a broad-based gradual tendency for countries to become more financially open in recent decades; as a result, CFMs have in many instances been relaxed or removed (referred to as capital flow liberalization in the Institutional View). - Institutional View guidance: - Capital flow liberalization needs to be well planned, timed, and sequenced, especially to ensure that its benefits outweigh the costs. - The degree of liberalization appropriate for a country at a given time depends on its specific circumstances, notably its financial and institutional development. - There is no presumption that full liberalization of capital flows is an appropriate goal for all countries at all times (IMF 2012, 2022). - Role for CFMs in practice: - CFMs are part of the policy toolkit and may be useful in certain circumstances, but they should not substitute for warranted macroeconomic adjustment. - CFMs may be useful during excessive capital flow episodes (that is, capital inflow surges or crisis-related disruptive outflows) when macroeconomic or financial stability is threatened and the space to address risks with conventional policies is constrained. - CFMs may also be useful outside of excessive episodes if stock vulnerabilities (for example, currency mismatches) have built up as a result of capital inflows and cannot be effectively addressed with conventional policies. ### Implementation of CFMs - IMF practice: - The IMF maintains a taxonomy of CFMs of macro-critical policy measures assessed as CFMs and referred to in published IMF staff reports as they have been introduced or adjusted since the adoption of the Institutional View. - Typical application levels: - CFMs are often applied at the aggregate or sectoral level, reflecting that challenges from large and volatile capital flows can be broad based or sectoral. - CFMs can be deployed on a structural basis or only temporarily (that is, wall versus gates) and can be applied separately to inflows and outflows. - Examples of application purposes: - Applied to inflows to minimize speculative bubbles in sectors. - Applied to outflows in (imminent) crisis circumstances to preserve reserves and attenuate exchange rate pressures and spillovers to the financial system while appropriate macroeconomic adjustments are undertaken. - Compliance and verification: - Compliance with stipulated CFMs typically requires that regulated financial intermediaries verify transactions and identities of the parties to the transaction. - Process typically starts with the issuance of regulations that specify the controlled transactions. - Regulated financial agents—such as commercial banks that facilitate payments and transfers, exchange bureaus selling foreign exchange for travel purposes, brokers, and security dealers—ensure that only transactions permitted by regulations take place. - The central bank can verify compliance by the regulated entities with applicable laws and regulations through off-site monitoring and on-site inspections. - Verification procedures vary with the nature of the CFM and could include: - checking or registering counterparties and the purpose of the foreign exchange purchase or sale; - proving that the foreign exchange was purchased for the stated purposes; - enforcing limits set by the foreign exchange regulations; - verifying that authorization from the authorities was obtained. - The process may stipulate documentation needed to prove that the foreign exchange purchased or transferred is for the stated purpose and in the stated amount. ### Current trends and practices - Prevalence: - CFMs remain prevalent among IMF member countries, albeit on a reduced scale and scope. - Based on the Financial Account Restrictiveness Index, more than 90 percent of IMF member countries had some CFMs in place at the end of October 2021, although almost half had only a very limited number of CFMs, and only 21 countries had exchange control regimes that restricted the financial account transactions fully or partially. - Distribution: - The intensity of restrictions is higher in low-income and developing economies followed by emerging market economies, while advanced economies have largely liberalized their capital accounts. - Typical measures observed over 2010–21 (broad spectrum): - Exchange controls that prevent or limit the buying and selling of a national currency. - Caps on the allowed volume for the international sale or purchase of various financial assets. - Transaction taxes on currency exchanges. - Minimum stay requirements. - Requirements for mandatory approval. - Limits on the amount of money private citizens are permitted to remove from the country. ### Illustrative country practice categories (2010–21) - Examples of CFMs on inflows: - Tax: Inbound fund transfer; Inflows into financial markets; A stamp duty that is higher for nonresidents on property transactions than for residents. - Reserve requirement: Capital inflows or foreign exchange deposit accounts; Liabilities to nonresidents. - Ban: Borrowing from nonresidents. - Limits or restrictions: Limit on external borrowing; Limit on foreign exchange open positions (net/gross); Limit on foreign exchange transfers between local and foreign bank accounts; Limit on residential property sales to foreigners. - Approval and requirements: Approval to issue local currency denominated corporate bond in offshore; Approval for resident land purchase. - Examples of CFMs on outflows: - Tax: Remittance of funds by nonresidents from domestic financial assets transactions. - Reserve requirement: Foreign exchange purchase through foreign exchange derivative transactions; Offshore local currency deposits; Holding period for capital inflows, for example, foreign direct investment. - Surrender and repatriation: Export surrender; Repatriation of foreign exchange debts and external assets abroad. - Bans: Transfer abroad of proceed from local currency assets including profit transfers; Lending to nonresidents; Holding investments abroad; Foreign exchange purchase from onshore foreign exchange market for selected use cases; Participation in offshore local currency derivative trading. - Limits/restrictions: Limit on external borrowing; Limit on investment abroad; Limit on transaction abroad including local currency and foreign exchange derivative contracts. - Approval requirements: Approval for the overseas capital account transfer; Approval for the purchase of external assets. *Annex I: Overview of CFMs, Capital Flow Management Measures in the Digital Age (2): Design Choices for Central Bank Digital Currency, NOTE/2023/009.* --- _Source: https://www.imf.org/-/media/files/publications/ftn063/2023/english/ftnea2023009.pdf_