A Bank of Canada study released on October 4, 2023 found that central banks seeking to implement central bank digital currencies (CBDCs) to achieve financial inclusion will face a number of unknown challenges.

The study, titled "CBDCs and financial inclusion: an examination of challenges and opportunities," found that CBDCs have the potential to facilitate access to financial services for people who are currently excluded. However, the study also found that there are a number of challenges that central banks will need to address for CBDCs to be truly inclusive.

One of the main challenges is the lack of access to technology. CBDCs rely on digital technology, such as blockchain technology, which can be expensive and difficult to use for people who do not have access to modern technology.

Another challenge is the lack of financial literacy. People who are financially excluded often lack the basic understanding of how financial services work. This can make it difficult for them to use CBDCs effectively.

The study also found that central banks will need to carefully consider the social and economic implications of CBDCs. For example, CBDCs could displace traditional financial service providers, which could have a negative impact on the communities that rely on these services.

Overall, the study found that CBDCs have the potential to be a powerful tool for financial inclusion. However, central banks will need to address a number of challenges to make CBDCs truly inclusive.

Source: https://twitter.com/bankofcanada/status/1708104509799514560

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