Cenfri has deepened its work on CBDC amid growing interest from central banks

Central Bank Digital Currency (CBDC) has emerged as a key consideration for many central banks across the world and has become a focal area of research for Cenfri over the past four years. Our insights have progressed from understanding the concept to analysing the implications of retail CBDC for financial inclusion, and economic and payment ecosystem efficiency in an emerging market context. 

To take stock of our learnings to date and what they mean for us going forward, the Cenfri CBDC team hosted a brown bag lunch session on 29 June 2022 to share these insights with select partners, including colleagues from the World Bank, the South African Reserve Bank and the University of the Western Cape. The session itself touched on a variety of areas – including providing a holistic introduction to the concept of CBDC, why it matters, and an overview of the potential for CBDC to impact financial inclusion in developing economies. The presentation finished with with an outline of Cenfri’s house-view of CBDC as well as our focus areas moving forward – which are briefly elaborated on below. 

The realistic potential of CBDC is unique to every context and will depend on the intended purpose and goals.  Our work to date suggests that although developing countries cite financial inclusion and payment system efficiency as two of their main reasons for exploring CBDC, the reality is that CBDC is not a panacea for solving these issues. If the CBDC is not context specific and fit for purpose in its design, it could end up being ineffective, costly and potentially have unintended consequences. Central banks need to carefully assess their unique context, and have a clear idea of the key needs that CBDC will address to avoid CBDC being, “a very costly hammer looking for a nail.” 

We have a host of interesting studies for you to engage with, including our FSD Africa funded projects on CBDC and Financial Inclusion and our Eswatini CBDC diagnostic.  The forthcoming study with the Alliance for Financial Inclusion will further shed light on the link between financial inclusion and CBDC. For the brown bag lunch session slide deck click the link below.

If you would like to find out more about the work we do on CBDC, kindly contact Antonia Esser.