Capital Flow Management Measures in the Digital Age (2): Design Choices for Central Bank Digital Currency
September 15, 2023
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This fintech note looks at how capital flow measures (CFMs) could be implemented with central bank digital currency (CBDC), and what benefits, risks and complexities could arise. There are several implications of the analysis. First, CBDC ecosystems should generally be designed such that they can accommodate the introduction of CFMs. Second, thanks to the programmability of the payment infrastructure given by the new digital technologies, certain CFMs could likely be implemented more efficiently and effectively with CBDC compared to the traditional system. Third, implementing CFMs requires central banks to collaborate on practices and standards. Finally, CFMs on CBDC need to operate alongside traditional CFMs.
Subject: Balance of payments, Capital flow management, Capital flows, Central Bank digital currencies, Digital wallets, Economic sectors, External position, Foreign assets, Technology
Keywords: Capital flow management, Capital flow measures, Capital flows, CBDC ecosystem, CBDC implementation, Central Bank digital currencies, Central bank digital currency, Digital wallets, fencing CBDC, Foreign assets, Global, IMF Fintech Note 2023/009, IMF Library, smart CFMs
Pages:
37
Volume:
2023
DOI:
Issue:
009
Series:
Fintech Notes No 2023/009
Stock No:
FTNEA2023009
ISBN:
9798400252105
ISSN:
2664-5912
