Fintech Notes

Capital Flow Management Measures in the Digital Age (2): Design Choices for Central Bank Digital Currency

Author/Editor:

Dong He ; Annamaria Kokenyne ; Tommaso Mancini Griffoli ; Marcello Miccoli ; Thorvardur Tjoervi Olafsson ; Gabriel Soderberg ; Hervé Tourpe

Publication Date:

September 15, 2023

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Summary:

This fintech note looks at how capital flow measures (CFMs) could be implemented with central bank digital currency (CBDC), and what benefits, risks and complexities could arise. There are several implications of the analysis. First, CBDC ecosystems should generally be designed such that they can accommodate the introduction of CFMs. Second, thanks to the programmability of the payment infrastructure given by the new digital technologies, certain CFMs could likely be implemented more efficiently and effectively with CBDC compared to the traditional system. Third, implementing CFMs requires central banks to collaborate on practices and standards. Finally, CFMs on CBDC need to operate alongside traditional CFMs.

Series:

Fintech Notes No 2023/009

Subject:

Economic sectors

Frequency:

occasional