Positioning Central Bank Digital Currency in the Payments Landscape

Fintech Notes, October 2, 2024

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Positioning Central Bank Digital Currency in the Payments Landscape

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Bibliographic details

• Authors: Manisha Patel, Safari Kasiyanto, Andre Reslow
• Published: October 2, 2024
• Series: Fintech Notes
• DOI: https://doi.org/10.5089/9798400289118.063

Scope and purpose

• Focus: comparison of retail CBDC (digital central bank money available to the general public) with fast payment systems (FPS) and electronic money (e-money) from a payments perspective.
• Objective: show how CBDC may support a jurisdiction’s vision on payments in the digital age without advocating CBDC over FPS or e-money.
• Emphasis: choices are context-specific; coexistence of FPS, e-money, and CBDC is possible through good design to meet central bank objectives such as payments efficiency and supporting financial inclusion.

Key findings and comparative observations

• Common policy questions the IMF is asked:
  • Do central banks need a CBDC when already equipped with other well-established digital payments systems?
  • For central banks with less-developed solutions: Should a central bank establish one system over the other?
• Notable comparative points:
  • The balance of arguments for any one system may change over time.
  • Choice among CBDC, FPS, and e-money may not be mutually exclusive in many jurisdictions.
  • Some benefits are unique to CBDC, such as maintaining access to central bank money in an increasingly digitalized age.
  • Through good design, all three systems could meet central bank objectives including payments efficiency and supporting financial inclusion.

Strategic guidance and recommendations for central banks

• Central banks should establish a strategy that, at minimum, allows them to:
  • Monitor trends and core benefits of multiple solutions as developments occur.
  • Plan, adapt, and drive developments in their payments landscape.
• Resource constraints imply trade-offs; central banks should weigh:
  • The incremental benefits of CBDC relative to existing FPS and e-money systems.
  • The possibility of designing interoperable and complementary arrangements among CBDC, FPS, and e-money.

Publication and metadata

• Title: Positioning Central Bank Digital Currency in the Payments Landscape
• Authors: Manisha Patel, Safari Kasiyanto, Andre Reslow
• Publication date: October 2, 2024
• Series: Fintech Notes No 2024/006
• Issue: 006
• Volume: 2024
• Pages: 46
• DOI: https://doi.org/10.5089/9798400289118.063
• Stock No: FTNEA2024006
• ISBN: 9798400289118
• ISSN: 2664-5912

Subjects and keywords

• Subject: Central Bank digital currencies, Digital financial services, Financial markets, Monetary base, Money, Payment systems, Technology
• Keywords: Annex I. payment system case, CBDC, central bank, Central Bank digital currencies, Central bank digital currency, digital currencies, Digital financial services, digital payments, e-money, fast payments, FPS, Global, IMF Fintech Note 2024/006, infrastructure provider, Monetary base, payment infrastructure, payment systems, positioning central bank digital currency

Source: Positioning Central Bank Digital Currency in the Payments Landscape, Fintech Notes (IMF), October 2, 2024.

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