Central Bank Digital Currencies and Financial Inclusion

The discourse and trials revolving around Central Bank Digital Currencies (CBDCs) stem from substantial shifts and advancements within the financial landscape of the past decade. Emerging within the broader sphere of Fintech, these technological strides, often linked to disruptive innovations, have been championed by entrepreneurs aiming to drive essential progress towards universal financial inclusion. Notably, initiatives like Libra Coin, once spearheaded by the now-defunct Libra Consortium, were specifically geared towards fostering financial inclusion globally, especially within economies grappling with inefficient payment infrastructures. Amid the surge of CBDC projects in response to private global stablecoins, a critical query arises: do they genuinely enhance financial inclusion compared to traditional fiat currencies reliant on established public-private payment frameworks? This chapter navigates this dilemma by scrutinizing pivotal attributes of CBDCs and the spectrum of design choices accessible to central bankers and governments. It addresses key challenges confronting CBDCs in advancing financial inclusion, analyzes potential alternatives to CBDCs — specifically, instant payment systems — and contextualizes CBDCs within the broader challenge of preserving the centrality of central banks and fostering financial inclusion. This assessment also considers the issues associated with upholding democratic values.