World Economic Forum issues framework for central bank digital currencies

Quick Take

  • The World Economic Forum has developed a toolkit for central bank digital currencies (CBDCs)
  • It is intended to help central banks decide if CBDC is right for them
  • The 28-page toolkit provides information on retail, wholesale, cross-border and “hybrid” CBDCs for all sizes of countries

The World Economic Forum (WEF), an international organization committed to improving the state of the world, has for the first time developed a framework for central bank digital currencies (CBDCs).

The framework, dubbed the “CBDC Policy‑Maker Toolkit,” provides a guide for central banks around the world to help them decide if CBDC is right for them. For those who are already researching, it helps them "make progress quickly," said the WEF.

Any CBDC implementation will have a "profound impact domestically and internationally,” said Sheila Warren, head of blockchain and distributed ledger technology at the WEF, adding: “It is imperative that central banks proceed cautiously, with a rigorous analysis of the opportunities and challenges posed.”

The 28-page toolkit provides information on retail, wholesale, cross-border and “hybrid” CBDCs, for all sizes of emerging and developed countries. It has been developed by the WEF in an association with over 40 central banks, academic researchers and financial institutions, among others.

This toolkit describes a step‑by‑step evaluation process for CBDCs, including potential benefits and challenges.

For instance, in the case of domestic wholesale CBDCs, the WEF said, while it has the potential to reduce costs for cross‑border payments, it may not add value for countries where an “efficient” system already exists.

Similarly, retail CBDCs could reduce costs and frictions associated with cash management, but also require “heavy” investment in cybersecurity systems.

'Confidently' evaluating CBDCs 

The WEF said it neither adv