Central Bank Digital Currency (CBDC) – Virtual Handbook

5. Could a CBDC Help Promote Financial Inclusion?

Financial inclusion is often a key policy objective for a retail CBDC, especially in emerging and lower-income countries. If properly designed to address barriers to financial inclusion, CBDCs could gain acceptance as a payment mechanism for financially excluded populations. CBDCs can be designed to replicate some of the desirable properties of cash, for instance, access to payments without a bank account, trust associated with central bank money, low or no fees, and less stringent identity requirements for low-risk populations who struggle to obtain formal identity documentation. However, full compliance with financial integrity requirements remains necessary. A CBDC could also offer benefits beyond those of cash, such as the development of financial history to help widen access to credit. A CBDC can thus serve as a valuable entry point to the formal financial system. As a public-sector led initiative without profit incentive, CBDCs could also stimulate competition by lowering the prices of payments and financial services. Moreover, CBDCs can address the needs of remote and low-income populations not well served by the private sector, through availability on a variety of hardware devices and in offline environments. However, a CBDC by itself is not a silver bullet to financial inclusion, as it can face barriers common for digital products such as gaps in digital and financial literacy, and access to electricity and digital networks. A CBDC may not be the best financial inclusion solution for every country, and policymakers should assess a wide range of policies and initiatives, including but not limited to CBDCs, to support financial inclusion.

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