{ "title": "Central Bank Digital Currency (CBDC) - Virtual Handbook", "sourceUrl": "https://www.imf.org/en/topics/digital-payments-and-finance/central-bank-digital-currency/virtual-handbook", "canonical": "https://www.imf.org/en/topics/digital-payments-and-finance/central-bank-digital-currency/virtual-handbook", "overlayPath": "/en/topics/digital-payments-and-finance/central-bank-digital-currency/virtual-handbook/index.md", "summary": "The IMF’s Central Bank Digital Currency (CBDC) Virtual Handbook is a reference guide for policymakers and experts at central banks and ministries of finance. It also serves as the basis for the IMF’s engagement with country authorities and other stakeholders.", "sections": [ { "heading": "Overview", "content": "- The IMF’s Central Bank Digital Currency (CBDC) Virtual Handbook is a reference guide for policymakers and experts at central banks and ministries of finance and serves as the basis for the IMF’s engagement with country authorities and other stakeholders.\n- Focus: practical tools and resources to support IMF member countries in planning implementation of the 2025 System of National Accounts (SNA) and BPM7.\n- Aims: help define scope, develop communication and dissemination strategies, engage stakeholders, and build realistic, well-governed implementation plans tailored to country circumstances.\n- Features: country case studies to share experiences and lessons learned and foster peer learning and collaboration.\n- Last Updated: July 2026" }, { "heading": "1. How Should Countries Explore CBDCs?", "content": "- Presents a dynamic framework that is iterative, flexible, and responsive to new information.\n- Key sequential (but non-linear) steps:\n - Clearly establish policy objectives of CBDCs and relevant success measures.\n - Identify and quantify risks where possible and develop strategies to contain them.\n - Assess domestic capacity to experiment with, regulate, oversee, and implement CBDCs.\n - Develop a communication strategy to guide stakeholder engagement early on.\n - Establish a set of feature requirements based on previous steps.\n - Ensure a sound legal basis and robust regulatory foundations from the start.\n- Emphasis: exploration should continue even beyond issuance given rapid technological developments and evolving lessons worldwide." }, { "heading": "2. How Can Central Banks Manage CBDC Product Development?", "content": "- Introduces the \"5P methodology\" to guide exploration and development from research to potential launch.\n- The 5P methodology comprises five phases:\n - Preparation: research trends, define objectives, establish success criteria, evaluate feasibility, assess capacity, analyze risks.\n - Proof-of-concept: small-scale empirical tests and validation, typically in a laboratory environment.\n - Prototype: development or acquisition of necessary technologies and selection of partners.\n - Pilot: live testing of a quasi-final product.\n - Production: final issuance and operation of the CBDC.\n- Purpose: facilitate experimentation, support progressive decision-making, and manage risks; draws on experiences from various jurisdictions and best practices across industries." }, { "heading": "8. CBDC Adoption: Inclusive Strategies for Intermediaries and Users", "content": "- Observation: among jurisdictions with launched CBDCs or large-scale pilots, adoption remains slow and limited.\n- Key barriers: chicken-and-egg adoption problem between consumers and merchants.\n- Recommendation: emphasize adoption early in the CBDC journey through strategic policy and design choices that encourage end-user and intermediary involvement from the outset.\n- Introduces a framework of measures:\n - Regulatory strategies\n - Education and communication initiatives\n - Design and deployment choices\n - Incentive mechanisms to prepare for and manage adoption" }, { "heading": "11. Cross-Border Payments with Retail CBDCs: Design and Policy Considerations", "content": "- Retail CBDC can improve cross-border payments by being a safe, liquid asset that reduces reliance on intermediaries and settlement risks.\n- CBDC provides a clean slate to redesign and optimize cross-border payment processes.\n- Distills design and policy considerations across payment steps: access, communication, currency conversion, compliance, and settlement.\n- Recommendation: consider cross-border implications early to avoid unintended barriers, even if CBDC is initially intended for domestic use.\n- Emphasis on adoption of international standards, access policy evaluation, and international cooperation." }, { "heading": "12. Evaluating the Implications of CBDC for Financial Stability (NEW)", "content": "- Identifies six key transmission channels through which CBDC can affect financial stability—positively or negatively:\n - bank funding and lending\n - fee income\n - run risk\n - information flows\n - payment system resilience\n - (sixth channel implied within the chapter context)\n- Synthesizes findings from existing studies that quantify some effects and explores how outcomes are shaped by country-specific characteristics, CBDC adoption, and design features.\n- Provides practical guidance on analytical tools and models to evaluate financial stability risks.\n- Discusses risk containment via appropriate CBDC design and safeguards." }, { "heading": "13. The Impact of Central Bank Digital Currency on Payments Competition (NEW)", "content": "- CBDC can affect payments competition as a payment instrument and as platform infrastructure for intermediaries.\n- Competitive impact depends on existing payments landscape, regulation, and CBDC design.\n- Potential benefits in less competitive markets via four channels:\n - pricing discipline\n - quality improvements\n - increased contestability\n - broader financial access\n- In more competitive markets, effects may be more muted and operate through broader access to payments.\n- Policy levers to foster competition: intermediary participation rules, fee structures, holding limits, and interoperability standards." }, { "heading": "14. Selected Legal Considerations for Central Bank Digital Currencies (NEW)", "content": "- rCBDC legal considerations:\n - mechanisms through which rCBDC is sanctioned as a currency\n - legal basis for issuance and provision of a payment platform\n - central bank’s mandate to regulate rCBDC service providers\n - legal relationships in the rCBDC landscape and assessment of legal risks\n - design-feature legal implications: holding and transaction limits, fee caps, interest accrual, programmability, offline capabilities\n- wCBDC legal considerations:\n - legal nature of wCBDC\n - central bank’s mandate to issue wCBDC and operate its platform (directly or through third parties)\n - legal relationships between the central bank and users\n - settlement finality of wCBDC transactions" }, { "heading": "15. Financial Integrity Implications of Retail Central Bank Digital Currencies (rCBDCs) (NEW)", "content": "- Focus: application of international AML/CFT standards in an rCBDC setting.\n- Identifies main categories and characteristics of rCBDCs with potential financial integrity implications.\n- Analyzes how rCBDC features might impact effective implementation of an issuing jurisdiction’s AML/CFT regime.\n- Provides guidance and suggested good practices for policymakers and competent authorities to consider prior to rCBDC launch and to inform rCBDC designs.\n- Highlights current challenges and open questions given novelty of rCBDCs and limited practical experience." }, { "heading": "16. Payment Resilience in Fragile and Conflict-Affected States: Lessons for CBDC (NEW)", "content": "- Explores how Fragile and Conflict-affected States (FCS) can strengthen payment ecosystem resilience against disruptions from conflict, natural disasters, or infrastructure failures.\n- Introduces a framework to assess vulnerabilities across payment ecosystem layers:\n - connectivity infrastructure\n - payment infrastructure\n - intermediaries\n - payment solutions\n - user access\n- Draws on experiences from Ukraine, West Bank and Gaza, Haiti, the CEMAC region, Tuvalu, Sudan, and Yemen.\n- Highlights practical strategies such as offline functionality, redundancy, and interoperability that CBDC and digital innovations could mimic.\n- Lessons are grounded in fragile settings but have broader relevance for preparedness and payment continuity." }, { "heading": "17. Central Bank Exploration of Tokenized Reserves (NEW)", "content": "- Addresses how central banks should explore tokenized reserves—making reserves available to selected banks using distributed ledger technology.\n- Covers:\n - policy objectives for tokenized reserves\n - operating models and central bank roles\n - implications for monetary policy implementation\n - alternative solutions\n - implementation strategies\n- Emphasizes that strategic decisions and policy options will vary across jurisdictions reflecting differences in resources, legal systems, and policy priorities." } ], "bullets": [ "The IMF’s Central Bank Digital Currency (CBDC) Virtual Handbook is a reference guide for policymakers and experts at central banks and ministries of finance and serves as the basis for the IMF’s engagement with country authorities and other stakeholders.", "Focus: practical tools and resources to support IMF member countries in planning implementation of the 2025 System of National Accounts (SNA) and BPM7.", "Aims: help define scope, develop communication and dissemination strategies, engage stakeholders, and build realistic, well-governed implementation plans tailored to country circumstances.", "Features: country case studies to share experiences and lessons learned and foster peer learning and collaboration.", "Last Updated: July 2026", "Presents a dynamic framework that is iterative, flexible, and responsive to new information.", "Key sequential (but non-linear) steps:", "Emphasis: exploration should continue even beyond issuance given rapid technological developments and evolving lessons worldwide.", "Introduces the \"5P methodology\" to guide exploration and development from research to potential launch.", "The 5P methodology comprises five phases:", "Purpose: facilitate experimentation, support progressive decision-making, and manage risks; draws on experiences from various jurisdictions and best practices across industries.", "Observation: among jurisdictions with launched CBDCs or large-scale pilots, adoption remains slow and limited.", "Key barriers: chicken-and-egg adoption problem between consumers and merchants.", "Recommendation: emphasize adoption early in the CBDC journey through strategic policy and design choices that encourage end-user and intermediary involvement from the outset.", "Introduces a framework of measures:", "Retail CBDC can improve cross-border payments by being a safe, liquid asset that reduces reliance on intermediaries and settlement risks.", "CBDC provides a clean slate to redesign and optimize cross-border payment processes.", "Distills design and policy considerations across payment steps: access, communication, currency conversion, compliance, and settlement.", "Recommendation: consider cross-border implications early to avoid unintended barriers, even if CBDC is initially intended for domestic use.", "Emphasis on adoption of international standards, access policy evaluation, and international cooperation.", "Identifies six key transmission channels through which CBDC can affect financial stability—positively or negatively:", "Synthesizes findings from existing studies that quantify some effects and explores how outcomes are shaped by country-specific characteristics, CBDC adoption, and design features.", "Provides practical guidance on analytical tools and models to evaluate financial stability risks.", "Discusses risk containment via appropriate CBDC design and safeguards.", "CBDC can affect payments competition as a payment instrument and as platform infrastructure for intermediaries.", "Competitive impact depends on existing payments landscape, regulation, and CBDC design.", "Potential benefits in less competitive markets via four channels:", "In more competitive markets, effects may be more muted and operate through broader access to payments.", "Policy levers to foster competition: intermediary participation rules, fee structures, holding limits, and interoperability standards.", "rCBDC legal considerations:", "wCBDC legal considerations:", "Focus: application of international AML/CFT standards in an rCBDC setting.", "Identifies main categories and characteristics of rCBDCs with potential financial integrity implications.", "Analyzes how rCBDC features might impact effective implementation of an issuing jurisdiction’s AML/CFT regime.", "Provides guidance and suggested good practices for policymakers and competent authorities to consider prior to rCBDC launch and to inform rCBDC designs.", "Highlights current challenges and open questions given novelty of rCBDCs and limited practical experience.", "Explores how Fragile and Conflict-affected States (FCS) can strengthen payment ecosystem resilience against disruptions from conflict, natural disasters, or infrastructure failures.", "Introduces a framework to assess vulnerabilities across payment ecosystem layers:", "Draws on experiences from Ukraine, West Bank and Gaza, Haiti, the CEMAC region, Tuvalu, Sudan, and Yemen.", "Highlights practical strategies such as offline functionality, redundancy, and interoperability that CBDC and digital innovations could mimic.", "Lessons are grounded in fragile settings but have broader relevance for preparedness and payment continuity.", "Addresses how central banks should explore tokenized reserves—making reserves available to selected banks using distributed ledger technology.", "Covers:", "Emphasizes that strategic decisions and policy options will vary across jurisdictions reflecting differences in resources, legal systems, and policy priorities.", "**Read the Chapter**", "**Read the Chapter**", "**Read the Chapter**", "**Read the Chapter**", "**Read the Chapter**", "**Read the Chapter**", "**Read the Chapter**", "**Read the Chapter**", "**Read the Chapter**", "**Read the Chapter**" ], "related": [ { "title": "Read the Chapter", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/ftn063/2023/english/ftnea2023007.pdf", 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