Published on All About Finance

CBDC and financial inclusion: Changing the paradigm (Part 2)

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Young woman selling tomatoes in a local african market receiving payment via mobile phone transfer | © Young woman selling tomatoes in a local african market receiving payment via mobile phone transfer | ©

In the first part of this commentary, I noted that boosting financial inclusion ranks high across emerging market and developing economies as a motivation for issuing retail central bank digital currencies (CBDCs). The question is, can CBDCs effectively support financial inclusion?

The change in paradigm

Auer et al. (2022) notice that many of the features that characterize CBDC design, as it is evolving from central bank research and practice, can be equally offered by other payment innovations. In addition, combining different payment innovations (open application programming interfaces, fast payment services, contactless chips, and QR codes) could achieve many of the same goals envisaged for CBDC, especially when accompanied by regulatory and oversight arrangements that public authorities can use to catalyze private sector players, enforce sound governance, and foster coordination and collaboration.

It appears that CBDC does not have a unique proposition with respect to financial inclusion. Why, then, do so many central banks place such high expectations on CBDC as a means to promote greater financial inclusion?

The point emphasized here is not that CBDC would improve financial inclusion. Quite the contrary, issuing CBDC — while not a silver bullet to address financial inclusion — would put the central bank under extreme pressure to ensure that CBDC access would be guaranteed everywhere, always, and to everybody across the national jurisdiction. Hence, it would raise the profile of financial inclusion as a national policy priority and put it squarely on the shoulders of the CBDC issuing central bank, at least to the extent that providing digital currency services is concerned.

Not doing so would make the central bank responsible for issuing a national currency that would de facto discriminate between citizens who can access digital instruments, on the one hand, and those who cannot, on the other. Although this is acceptable for money instruments that originate from the private sector, it would not be acceptable for any money originating from the state.

This would set a major change in the financial inclusion paradigm. Being in the lead of the design and implementation of a national financial inclusion strategy would no longer be a matter of central bank preference but a real obligation for the central bank to fulfill.

By implication, a CBDC issuing central bank should stand ready to take any measures necessary to achieve the objective, much as central banks have done historically (and much as they continue to do to this day) to ensure every citizen’s access to physical cash, everywhere and always. These measures could even include extreme ones, ranging, inter alia, from building nationwide agent networks for dealing with CBDC end-users; to supporting costly CBDC development and setup costs as well as migration, marketing, and awareness-building programs, even without private sector participation; and to subsidizing private sector service providers that would otherwise see no business case for supplying services to certain groups of people or for servicing certain country areas.

More broadly, a central bank issuing CBDC would have to bear any share of the bill that delivering CBDC to the whole country would entail, including in circumstances in which the private sector was not willing to take any part in it.  The risk could be for the central bank eventually to find itself entrapped in unsustainable, open-ended commitments.


Such risk would not necessarily materialize. Yet, central banks deciding to move forward with CBDC issuance and recognizing the financial inclusion responsibility that would fall upon them should give serious consideration to critical scenarios such as the one described here.

Central banks should therefore plan well ahead for engaging relevant stakeholders appropriately, to achieve broad national consensus on the CBDC program. They should aim to establish a sound, effective infrastructure for distributing and using CBDC effectively across the whole country, and the stakeholders should agree on a sustainable burden-sharing arrangement that would make the program financially and operationally sustainable.

Similarly, central banks should not shy away from instituting (and, if necessary, even forcing) all the required changes in the governance and access policies of payment systems, or from demanding higher levels of commitment to safety, reliability, and efficiency from stakeholders, with a view to ensuring the success of a truly inclusive CBDC. 


Auer, R, N Boakye-Adjei, H Banka, A Faragallah, J Frost, H Natarajan, and J Prenio (2022), “Central bank digital currencies: A new tool in the financial inclusion toolkit?” FSI Insights Paper, no. 41, April.

CPMI-World Bank (2020), Payment Aspects of Financial Inclusion in the Fintech Era, report by the Committee on Payments and Market Infrastructures and World Bank Group, April 2020.


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