Implications of CBDC for monetary operations (IMF)

The IMF published a paper that analyzes how the issuance of central bank digital currency (CBDC) could affect monetary operations, which include central banks managing the demand and supply of reserves to achieve a desired stance of monetary policy. The note outlines three scenarios: CBDCs substituting cash, commercial bank deposits, and reserves, with implications varying based on design features and market developments. It discusses how these scenarios influence balance sheets and reserves, potentially drawing short-term interest rates away from the policy target and complicating liquidity forecasting. Furthermore, the note shows how central banks could calibrate monetary operations such as engaging in a fine-tuning operation and provide additional reserves on demand to ensure that central banks can maintain their monetary policy stance. Finally, careful design of CBDCs, such as setting criteria for access, holding quantity, and remuneration, can mitigate adverse effects on monetary operations. [Read more at the IMF]

Digital payments: a framework for inclusive design (BoC)

The Bank of Canada (BoC) published a paper how digital payments can be made more cognitively accessible, focusing on removing cognitive barriers present in many digital interfaces and products. It proposes an inclusive approach since involving people with cognitive disabilities in design, testing, and refinement is crucial. The proposed framework centers on system learnability and user workload as the two key measures of cognitive accessibility in digital payment and banking interfaces. A prototype interface is developed and tested for voice payments, which successfully demonstrates that the framework provides an effective iterative design approach to enhance cognitive accessibility and usability. [Read more at the BoC]

Upcoming Speaking Engagements:

• Digital Euro Conference 2025, Frankfurt, March 27, 2025. The DEC25 conference will explore the future of money with a focus on CBDCs, stablecoins, tokenized deposits, and the intersection of AI and digital ID. When you register, get 20% off the regular ticket price by using the Kiffmeister20 code! [Find out more and register here]

And just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at john@kiffmeister.com.