2023-09-21-IMF-Central_Bank_Digital_Currency_39_s_Role_in_Promoting_Financial_Inclusion_37页_801kb

Central Bank Digital Currency's Role in Promoting Financial Inclusion

Core Content

This Fintech Note from the International Monetary Fund (IMF) explores the potential of Central Bank Digital Currencies (CBDCs) to enhance financial inclusion. It outlines the current global interest in CBDCs, the challenges faced by financially excluded populations, and the opportunities CBDCs present to overcome these barriers.

Main Points

1. Global Interest in CBDCs

• Over 93% of central banks are exploring CBDCs, with 58% considering issuing a retail CBDC in the short or medium term.
• More than 100 countries are exploring or have launched CBDC pilots.
• CBDCs are viewed as a potential tool for financial inclusion, especially in emerging and low-income countries.

2. Financial Inclusion: Definition and Importance

• Financial inclusion refers to access to useful and affordable financial products and services (payments, savings, credit, insurance).
• It supports 7 of the 17 United Nations Sustainable Development Goals.
• It helps reduce poverty, stimulate economic growth, and reduce income inequality.

3. The Pathway to Financial Inclusion

• Access to digital payments is a key first step toward broader financial inclusion.
• Cash is still the primary payment method for the financially excluded, but it limits their integration into the formal economy due to cost, privacy, and trust issues.
• Digital payments can help build financial history and access to other services.

4. CBDC as a Solution

• CBDC can be designed to mimic the properties of cash, such as accessibility, low cost, privacy, and trust.
• It can be used without a bank account and may support offline payments, making it accessible to those without reliable internet or mobile connectivity.
• CBDC can be integrated with digital wallets and other service providers, offering a more inclusive payment system.

5. Complementary Policies

• Digital infrastructure and literacy must be improved to support CBDC adoption.
• Digital identification systems can help streamline the onboarding process.
• Legal tender status and incentives for both users and merchants can promote CBDC adoption.

6. Challenges and Limitations

• CBDC is not a universal solution and requires careful design and complementary policies.
• The impact on financial inclusion is still speculative and needs more empirical evidence.
• There are trade-offs between promoting financial inclusion and reducing bank intermediation.

Key Information

• 1.4 billion people globally remain outside the formal financial system.
• 57% of adults in developing countries made digital payments in 2021.
• CBDC can be designed to be accessible, secure, and low-cost, particularly for small transactions.
• CBDC may offer offline functionality, which is critical for populations in remote or disaster-prone areas.
• Legal tender status, tax incentives, and merchant incentives can drive CBDC adoption.
• CBDC can help reduce intermediation costs, offering more efficient and affordable transactions.
• Privacy and trust are important considerations in CBDC design, especially for low-risk users.

CBDC and Other Financial Inclusion Solutions

• CBDC is one of several solutions for financial inclusion, alongside mobile money, digital wallets, and traditional financial services.
• While CBDC has unique advantages, it must be considered in conjunction with other initiatives to ensure maximum impact.
• The role of CBDC should not be viewed in isolation but as part of a broader ecosystem of financial inclusion tools.

Country-Specific Assessment Framework

• A step-by-step framework is proposed to evaluate the suitability of CBDC for improving financial inclusion in a country.
• The framework emphasizes understanding the specific conditions and drivers of exclusion in each country.
• It suggests that CBDC's design and implementation must be tailored to local needs and legal environments.
• Complementary policies are essential to address digital exclusion and support CBDC adoption.

Conclusion

CBDC has the potential to play a significant role in promoting financial inclusion, especially for low-income and marginalized populations. However, it is not a silver bullet and must be supported by appropriate policies and infrastructure. The success of CBDC in this context depends on its design, accessibility, and the extent to which it can be integrated with existing financial systems and services.