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Central Bank Digital Currency Development Enters the Next Phase

Many of the world’s monetary authorities are seeking more guidance on how best to pursue digital forms of central bank money

Central bank digital currencies can improve payment systems as well as financial inclusion—if they are appropriately designed. If not, they could pose risks.

While not all countries may see an immediate case to deploy a CBDC, many countries are exploring CBDCs so they will have the option to introduce one in the future if it becomes pertinent for them. Benefits are more likely to come in time, following the policies pursued by countries and the private sector’s response, as well as the evolution of technology.

In most cases, it would be useful for countries to continue exploring CBDC, carefully and systematically, as IMF Managing Director Kristalina Georgieva noted in her recent speech at the Singapore Fintech Festival.

The Bahamas, Jamaica, and Nigeria have already introduced CBDCs. And more than 100 countries are in the exploration stage. Central bankers in Brazil, China, the euro area, India, and the United Kingdom are at the forefront.

The IMF recently launched a virtual CBDC Virtual Handbook to collect and share knowledge with policymakers around the world, and to serve as a basis for the IMF’s engagement with country authorities. We intend this to be a living document that will be updated and expanded as our body of knowledge and analysis grows, and as new lessons and insights emerge from countries.

The chapters published so far cover process and policy topics:

Looking ahead, our engagement with central banks will continue as they pursue new technologies. We will keep assessing the potential effects of CBDCs on areas from financial stability to cybersecurity and cross-border payments and build on these first five chapters with new publications planned for next year. And we’ll continue our collaboration with other global bodies, including the Group of Twenty.

The IMF will continue assisting countries exploring CBDCs, along with efforts by other global bodies like the Bank for International Settlements.