{ "title": "Central Bank Digital Currency Development Enters the Next Phase", "publication": "IMF Blog, November 20, 2023", "sourceUrl": "https://www.imf.org/en/blogs/articles/2023/11/20/central-bank-digital-currency-development-enters-the-next-phase", "canonical": "https://www.imf.org/en/blogs/articles/2023/11/20/central-bank-digital-currency-development-enters-the-next-phase", "overlayPath": "/en/blogs/articles/2023/11/20/central-bank-digital-currency-development-enters-the-next-phase/index.md", "summary": "Many of the world’s monetary authorities are seeking more guidance on how best to pursue digital forms of central bank money", "sections": [ { "heading": "Overview", "content": "- Title: Central Bank Digital Currency Development Enters the Next Phase\n- Authors: Tobias Adrian, Dong He, Tommaso Mancini-Griffoli, Tao Sun\n- Date: November 20, 2023\n- Core point: Central bank digital currencies (CBDCs) can improve payment systems and financial inclusion if appropriately designed; poorly designed CBDCs could pose risks.\n- Strategic recommendation: In most cases, it would be useful for countries to continue exploring CBDC carefully and systematically." }, { "heading": "Current adoption and status", "content": "- Countries that have introduced CBDCs: The Bahamas, Jamaica, and Nigeria.\n- Exploration stage: More than 100 countries are in the exploration stage.\n- Leading central banks mentioned: Brazil, China, the euro area, India, and the United Kingdom." }, { "heading": "IMF resources and knowledge-sharing", "content": "- IMF initiative: Launched a virtual CBDC Virtual Handbook to collect and share knowledge with policymakers and to serve as a basis for the IMF’s engagement with country authorities.\n- Handbook approach: Intended as a living document to be updated and expanded as the IMF’s body of knowledge and analysis grows and as new lessons and insights emerge from countries.\n- Published chapters so far cover process and policy topics (summaries below)." }, { "heading": "Summaries of published chapters", "content": "- How Should Central Banks Explore Central Bank Digital Currency?\n - Central banks will take different paths depending on the degree of digitalization of the economy, the legal and regulatory frameworks, and the central bank’s capacity.\n - Proposes a dynamic decision-making process in which central banks can proceed despite uncertainty, and adjust the pace, scale, and scope of their initiatives in response to changes in domestic and international conditions.\n- A Guide to Central Bank Digital Currency Product Development.\n - Provides a step-by-step guide to address complex requirements and risks associated with CBDCs.\n - Introduces the 5P methodology: preparation, proof-of-concept, prototypes, pilots, and production.\n- Implications of Central Bank Digital Currencies for Monetary Policy Transmission.\n - Analyzes how CBDCs would likely affect monetary policy.\n - Summarizes: In general, policy transmission is not expected to be affected much under normal circumstances, but the effects can be more significant in an environment with low interest rates or financial market stress.\n- Implementing capital flow management measures with CBDC.\n - Explains how CBDCs could be designed to facilitate cross-border payments while still managing capital flows.\n - Notes that programmable payment infrastructure could allow some capital-flow management measures to be implemented more efficiently and effectively with a CBDC compared to the traditional approach.\n- Central Bank Digital Currency's Role in Promoting Financial Inclusion.\n - Positions CBDCs as a risk-free and widely acceptable form of digital money with potentially lower costs and greater accessibility.\n - If properly designed to replicate some properties of cash, CBDCs could gain acceptance as a payment mechanism for financially excluded populations and be an entry point to the broader formal financial system." }, { "heading": "Risks, policy considerations, and analytical priorities", "content": "- Design trade-offs: Benefits are more likely to come in time, depending on policies pursued by countries, the private sector’s response, and the evolution of technology.\n- Monetary policy: Monitor effects on policy transmission, especially under low interest rates or financial market stress.\n- Capital flows and cross-border payments: Explore CBDC design options that facilitate cross-border payments while enabling capital-flow management measures; leverage programmability of payment infrastructure.\n- Financial inclusion: Design CBDCs to replicate key properties of cash to increase acceptance among financially excluded populations.\n- Other assessment areas to continue: financial stability, cybersecurity, and cross-border payments." }, { "heading": "IMF engagement and collaboration outlook", "content": "- Future work: IMF will keep assessing potential effects of CBDCs across multiple areas and build on the first five chapters with new publications planned for next year.\n- Collaboration: IMF will continue collaboration with other global bodies, including the Group of Twenty and the Bank for International Settlements.\n- Ongoing assistance: The IMF will continue assisting countries exploring CBDCs.\n\nSource: Central Bank Digital Currency Development Enters the Next Phase — Tobias Adrian, Dong He, Tommaso Mancini-Griffoli, Tao Sun; November 20, 2023\n\n---\n\n\n References\n\n- speech\n- CBDC Virtual Handbook\n- How Should Central Banks Explore Central Bank Digital Currency?\n- A Guide to Central Bank Digital Currency Product Development\n- Implications of Central Bank Digital Currencies for Monetary Policy Transmission\n- Implementing capital flow management measures with CBDC\n- Central Bank Digital Currency's Role in Promoting Financial Inclusion\n\nSource: https://www.imf.org/en/blogs/articles/2023/11/20/central-bank-digital-currency-development-enters-the-next-phase" } ], "bullets": [ "[Markdown version](/en/blogs/articles/2023/11/20/central-bank-digital-currency-development-enters-the-next-phase/index.md)", "[Structured JSON version](/en/blogs/articles/2023/11/20/central-bank-digital-currency-development-enters-the-next-phase/index.json)", "[Bundle manifest](/en/blogs/articles/2023/11/20/central-bank-digital-currency-development-enters-the-next-phase/bundle-manifest.json)", "Authors: Tobias Adrian, Dong He, Tommaso Mancini-Griffoli, Tao Sun", "Published: November 20, 2023", "Title: Central Bank Digital Currency Development Enters the Next Phase", "Authors: Tobias Adrian, Dong He, Tommaso Mancini-Griffoli, Tao Sun", "Date: November 20, 2023", "Core point: Central bank digital currencies (CBDCs) can improve payment systems and financial inclusion if appropriately designed; poorly designed CBDCs could pose risks.", "Strategic recommendation: In most cases, it would be useful for countries to continue exploring CBDC carefully and systematically.", "Countries that have introduced CBDCs: The Bahamas, Jamaica, and Nigeria.", "Exploration stage: More than 100 countries are in the exploration stage.", "Leading central banks mentioned: Brazil, China, the euro area, India, and the United Kingdom.", "IMF initiative: Launched a virtual CBDC Virtual Handbook to collect and share knowledge with policymakers and to serve as a basis for the IMF’s engagement with country authorities.", "Handbook approach: Intended as a living document to be updated and expanded as the IMF’s body of knowledge and analysis grows and as new lessons and insights emerge from countries.", "Published chapters so far cover process and policy topics (summaries below).", "How Should Central Banks Explore Central Bank Digital Currency?", "A Guide to Central Bank Digital Currency Product Development.", "Implications of Central Bank Digital Currencies for Monetary Policy Transmission.", "Implementing capital flow management measures with CBDC.", "Central Bank Digital Currency's Role in Promoting Financial Inclusion.", "Design trade-offs: Benefits are more likely to come in time, depending on policies pursued by countries, the private sector’s response, and the evolution of technology.", "Monetary policy: Monitor effects on policy transmission, especially under low interest rates or financial market stress.", "Capital flows and cross-border payments: Explore CBDC design options that facilitate cross-border payments while enabling capital-flow management measures; leverage programmability of payment infrastructure.", "Financial inclusion: Design CBDCs to replicate key properties of cash to increase acceptance among financially excluded populations.", "Other assessment areas to continue: financial stability, cybersecurity, and cross-border payments.", "Future work: IMF will keep assessing potential effects of CBDCs across multiple areas and build on the first five chapters with new publications planned for next year.", "Collaboration: IMF will continue collaboration with other global bodies, including the Group of Twenty and the Bank for International Settlements.", "Ongoing assistance: The IMF will continue assisting countries exploring CBDCs.", "[speech](https://www.imf.org/en/News/Articles/2023/11/15/sp-111423-the-digital-finance-voyage-a-case-for-public-sector-involvement)", "[CBDC Virtual Handbook](https://www.imf.org/en/Topics/fintech/central-bank-digital-currency/virtual-handbook)", "[How Should Central Banks Explore Central Bank Digital Currency?](https://www.imf.org/en/Publications/fintech-notes/Issues/2023/09/08/How-Should-Central-Banks-Explore-Central-Bank-Digital-Currency-538504)", "[A Guide to Central Bank Digital Currency Product Development](https://www.imf.org/en/Publications/fintech-notes/Issues/2023/09/08/A-Guide-to-Central-Bank-Digital-Currency-Product-Development-538496)", "[Implications of Central Bank Digital Currencies for Monetary Policy Transmission](https://www.imf.org/en/Publications/fintech-notes/Issues/2023/09/15/Implications-of-Central-Bank-Digital-Currencies-for-Monetary-Policy-Transmission-538517)", "[Implementing capital flow management measures with CBDC](https://www.imf.org/en/Publications/fintech-notes/Issues/2023/09/15/Capital-Flow-Management-Measures-in-the-Digital-Age-2-Design-Choices-for-Central-Bank-538509)", "[Central Bank Digital Currency's Role in Promoting Financial Inclusion](https://www.imf.org/en/Publications/fintech-notes/Issues/2023/09/22/Central-Bank-Digital-Currency-s-Role-in-Promoting-Financial-Inclusion-538728)" ], "alternates": { "markdown": "/en/blogs/articles/2023/11/20/central-bank-digital-currency-development-enters-the-next-phase/index.md", "json": "/en/blogs/articles/2023/11/20/central-bank-digital-currency-development-enters-the-next-phase/index.json", "bundleManifest": "/en/blogs/articles/2023/11/20/central-bank-digital-currency-development-enters-the-next-phase/bundle-manifest.json" }, "generatedAtUtc": "2026-08-26T02:11:03.282Z" }