Central Bank Digital Currency: Further Navigating Challenges and Risks

International Monetary Fund

No 2025/041, IMF Policy Papers from International Monetary Fund

Abstract: This paper informs the Executive Board about recent developments in central bank digital currency (CBDC), and summarizes the key messages and findings from the third wave of CBDC virtual Handbook chapters published in November 2025. Both retail (rCBDC) and wholesale (wCBDC) CBDC explorations are advancing, with wholesale projects gaining prominence. Countries are in various stages of CBDC development, ranging from near-term issuance to pausing rCBDC efforts due to limited domestic needs. This set of six Handbook chapters covers macro-financial topics including the implications of rCBDCs for (1) financial stability and (2) payments competition; legal and regulatory themes such as (3) selected legal considerations and (4) financial integrity. It draws lessons from (5) payment ecosystem resilience in fragile and conflict-affected states for CBDC, and also sheds light on the emerging area of (6) tokenized reserves. The Handbook, financially supported by the Government of Japan, provides technical frameworks and guidance for policymakers especially in emerging markets, to assess CBDC’s potential and tradeoffs. It is not intended to evaluate CBDC’s overall appropriateness, which is left to policymakers given domestic circumstances.

Keywords: Central bank digital currency; CBDC Virtual Handbook; macro-financial implications; competition; legal considerations; financial integrity; fragile and conflict-affected states; tokenized reserves; IMF staff; payment system resilience; IMF policy; transparency policy; IMF Policy; Central Bank digital currencies; Financial sector stability; Anti-money laundering and combating the financing of terrorism (AML/CFT); International reserves; Global; South America; Central America; Caribbean; Southeast Asia; Pacific Islands; Africa (search for similar items in EconPapers)
Pages: 23
Date: 2025-11-19
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