Public Demand and Financial Implications for Retail CBDC: A Randomized Survey Experiment (BOK)

The Bank of Korea (BOK) published a working paper that examines public demand for retail central bank digital currency (CBDC) through a randomized survey experiment conducted in October 2023 with 2,879 South Korean respondents. The researchers tested five different CBDC designs varying by online/offline functionality, privacy protection features (through physical cards), and interest payment options. The key findings indicate that while CBDC design features (privacy protections and offline capabilities) do not significantly influence demand for CBDC as a payment method, offering positive interest rates does enhance its appeal as a store of value. The study finds that CBDC would primarily substitute debit card usage rather than credit cards or mobile payment apps, with overall projected usage around 28% of transactions. Trust in the central bank and willingness to adopt new technology emerge as more important determinants of CBDC demand than specific technical features. The authors recommend setting holding limits around 4-5 million KRW (EUR 3,000) to balance financial innovation against risks to bank disintermediation, as this would affect fewer than 15% of users while potentially reducing demand deposits by approximately 15-17% without such limits. [Source: BOK]

Payment Resilience in Fragile and Conflict-Affected States: Lessons for CBDC (IMF)

The IMF published a Fintech Note that analyzes how payment systems in fragile and conflict-affected states (FCS) face severe disruptions, from cyberattacks and infrastructure breakdowns to institutional challenges, and offers practical strategies to strengthen payment system resilience. Key lessons for policymakers include building redundancy through multisite operational architectures, leveraging distributed/cloud infrastructure and satellite networks, promoting user-centric design and digital literacy, and ensuring robust contingency planning and regulatory agility. The note finds that both cash and digital payments remain essential for continuity, with innovations in digital money, such as stablecoins and CBDC, playing emerging roles. For CBDCs, resilience depends on careful design, redundancy, offline capabilities, interoperability, and trust-building, but adoption faces operational, regulatory, and trust-related challenges unique to FCS settings. [Source: IMF]

The Impact of Central Bank Digital Currency on Payments Competition (IMF)

The IMF published a Fintech Note that examines whether central bank digital currencies (CBDCs) could enhance competition in retail payment markets. The authors analyze CBDC’s potential competitive impact through four channels: pricing discipline, service quality improvements, market contestability, and financial access expansion. The analysis identifies three market scenarios with varying competitive implications. In unregulated markets dominated by private platforms, CBDC could exert substantial competitive pressure by reducing fees and lowering entry barriers, particularly if interoperability with existing systems is ensured. In markets already subject to regulatory interventions such as interchange fee caps, CBDC would likely have more moderate effects, addressing residual gaps rather than fundamentally altering market dynamics. In jurisdictions with well-functioning public fast payment systems, CBDC would offer primarily incremental benefits, mainly extending access to underserved populations. The Note emphasizes that CBDC’s actual competitive impact depends critically on design choices—including fee structures, intermediary participation rules, holding limits, and interoperability requirements—and warns that overly aggressive pricing could crowd out private providers, potentially reducing payment system resilience and diversity. [Source: IMF]

Selected Legal Considerations for Central Bank Digital Currencies (IMF)

The IMF published a Fintech Note that provides comprehensive guidance for policymakers evaluating legal frameworks for central bank digital currency (CBDC) issuance, focusing primarily on retail CBDC (rCBDC) with separate analysis of wholesale CBDC (wCBDC). The authors examine how rCBDC should be legally classified as currency under public law—establishing it as a direct central bank liability with attributes including monopoly of issuance, cours forcé, legal tender status, and criminal law protections. The Note addresses central banks’ legal authority to issue rCBDC and operate payment platforms, the regulatory frameworks needed for intermediaries in two-tier distribution models, and the legal relationships between central banks, intermediaries, and users. Specific design features are analyzed, including limits on holdings and transactions, interest-bearing capabilities, programmability, and offline functionality. For wCBDC, the Note examines legal challenges related to tokenization, settlement finality, and central bank mandates to operate platforms for financial institutions. Throughout, the analysis draws on enacted laws and regulatory drafts from various jurisdictions, emphasizing that while the Note identifies legal considerations and potential approaches, it does not constitute a recommendation for jurisdictions to issue CBDCs. [Source: IMF]

Stablecoin Performance in Cross-Border Payments: Evidence from a Digital Dollar Wallet (Stanford FDCI)

The Stanford University Future of Digital Currency Initiative (FDCI) published a paper that examines the performance of dollar-based stablecoins in cross-border payments using a dataset of over 41 million transactions from Airtm, a digital dollar wallet platform, spanning May 2019 to May 2024. The analysis benchmarks transaction speed and cost against G20 Roadmap targets for enhancing cross-border payments. The findings indicate that stablecoins demonstrate substantial advantages in speed, with more than 96% of transactions settling within one hour, significantly exceeding the G20’s 75% target. Cost performance is more variable: approximately 51% of transactions meet the 3% fee target for remittances and 36.7% meet the 1% target for retail payments, though fees remain elevated for certain transaction types, particularly peer-to-peer marketplace on- and off-ramps. The study also highlights that stablecoins enable previously uneconomical use cases, with nearly half of enterprise disbursements being micropayments under $2. [Source: Stanford FDCI]

Upcoming Speaking Engagements:

The Cedi@60 Anniversary Currency Conference (Accra, Ghana, November 17-20) hosted by the Bank of Ghana, in partnership with Currency Research, will celebrate 60 years of the Ghanaian Cedi, bringing together leaders from across Africa and beyond to reflect on the currency’s legacy and chart its digital future. Learn about Ghana’s eCedi pilot and the future of sovereign digital currencies in Africa, and engage with innovators driving mobile money, QR code payments, and financial inclusion across the region. [Register here and get 15% off by using the Kiffmeister15 code!]

The Digital Euro Conference 2026 (Frankfurt, March 26) will explore the future of money with a focus on CBDCs, stablecoins, and commercial bank tokens. This hybrid event offers the perfect platform to understand the future of digital money! [Register here and get 20% off the regular ticket price by using the Kiffmeister20 code!]

I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.