CBDCs in emerging market economies

In recent years, emerging market economy (EME) central banks have increasingly engaged in projects related to central bank digital currencies (CBDCs). In a novel survey focusing on EME efforts, we find that the stage of their engagement – research, pilot or launch – varies according to differences in country circumstances, including the availability of digital infrastructure, their focus among different policy objectives, and the attendant motivations as well as concerns. Main motivations include issuing digital cash, improving financial inclusion, increasing competition among financial service providers as well as boosting cross-border payments efficiencies. Main concerns include potential for disintermediating banks, insufficient user adoption, cyber security risks and high operational burden on central banks. Data privacy and data governance issues are also important considerations. Design considerations are seen as crucial for harvesting the benefits of a CBDC while mitigating associated risks. In general, these design features include non-interest bearing CBDCs that serve primarily as a means of payment, some limits on CBDC holdings or transactions, a two-tier architecture and a platform interoperable with other payments systems