## How Should Central Banks Explore Central Bank Digital Currency?

_Fintech Notes, September 8, 2023_

## Source details

**Canonical URL:** [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)

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## Bibliographic details
- Authors: Gabriel Soderberg, John Kiff, Hervé Tourpe, Marianne Bechara, Stephanie Forte, Kathleen Kao, Ashley Lannquist, Tao Sun, Akihiro Yoshinaga
- Published: September 8, 2023
- Series: Fintech Notes
- DOI: https://doi.org/10.5089/9798400253768.063

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### Overview
- Digitalization of the economy provides both challenges and opportunities.
- Central banks should ensure that they have the capacity to continue to meet their policy objectives in the digital age.
- Central bank digital currency (CBDC) should be evaluated in this context: if designed appropriately, CBDCs could allow central banks to modernize payment systems and future-proof central bank money as the pace and shape of digitalization continues to evolve.
- The decision to proceed with CBDC exploration and an eventual launch would need to be jurisdiction specific, depending on:
  - the degree of digitalization of the economy,
  - the legal and regulatory frameworks, and
  - the central bank’s internal capacity.

### Key findings
- CBDCs can modernize payment systems and future-proof central bank money when designed appropriately.
- Jurisdiction-specific considerations are central to the decision to explore and launch a CBDC.
- A dynamic decision-making framework can help central banks make decisions under uncertainty.
- A phased and iterative approach allows central banks to adjust the pace, scale, and scope of CBDC projects as the domestic and international environment changes.

### Decision-making framework (proposed)
- Dynamic framework enabling decision-making under uncertainty.
- Phased and iterative approach to:
  - adjust pace,
  - adjust scale, and
  - adjust scope
  of CBDC projects in response to changing domestic and international conditions.

### Policy recommendations and implementation approach
- Evaluate CBDC in light of digitalization’s impact on policy objectives.
- Tailor exploration and launch decisions to jurisdiction-specific factors:
  - degree of digitalization of the economy,
  - legal and regulatory frameworks,
  - central bank internal capacity.
- Adopt a phased, iterative project design to retain flexibility and responsiveness.

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## Content in this bundle

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_Source: https://www.imf.org/en/publications/fintech-notes/issues/2023/09/08/how-should-central-banks-explore-central-bank-digital-currency-538504_