A Systematic Review of Retail CBDC Design for Financial Inclusion and Payment System Modernization

Hassan Raza and Danish Ahmed Siddiqui

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Abstract: he primary objective of this study is to develop an optimal framework for a Retail Central Bank Digital Currency (CBDC) by determining how its design features should be structured to achieve financial inclusion and monetary policy enhancement in a developing economy like Pakistan, while explicitly mitigating risks to financial stability and public adoption. This research employed a Systematic Literature Review (SLR) following the PRISMA 2020 Guidelines. A total of 224 academic papers were assessed to synthesize global findings and identify critical consensus and conflicts regarding CBDC design, particularly in contexts relevant to developing nations. The analysis reveals a strong consensus supporting a two-tiered, accessible, and interoperable model as the most pragmatic design. Literature frequently points to the use of Distributed Ledger Technology (DLT) for smart contract functionality and enhanced security, regardless of whether the system is account- or token-based. The review establishes two central tensions in design. The first highlighted is the core conflict between mitigating systemic risk and expanding access. The Second seem to arise from the perspective of Privacy vs. AML/CFT concerns. The viable path for this trade-off is indicated as a tiered system offering high privacy for low-value transactions while mandating stringent AML/CFT checks for large transfers. These findings provide a robust, evidence-based design blueprint for the State Bank of Pakistan and other developing countries considering the issuance of a retail CBDC. By explicitly defining the necessary trade-offs (stability vs. inclusion; privacy vs. compliance), this framework allows policymakers to prioritize design features that maximize public trust and regulatory compliance, thereby significantly accelerating the successful adoption and effective use of a CBDC as a tool for economic modernization and financial deepening.

Keywords: Central Bank Digital Currency; Distributed Ledger Technology; PRISMA2020 Guidelines; Digital Pakistani Rupees; Retail CBDC; Financial Inclusion; Financial Stablitiy (search for similar items in EconPapers)
Date: 2026
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