The term ‘central bank digital currency’ or CBDC is an over-arching phrase currently used to describe a wide variety of potential future digital currencies. A unifying definition of a CBDC is not straightforward because it can be designed to deliver multiple functions and purposes. The potential implementation of a CBDC is currently being explored, to varying degrees, among all 21 APEC member economies with financial inclusion among the top priorities for its potential implementation.
As an emerging technology, there is still a great deal of uncertainty pertaining to both the opportunities and challenges a CBDC may create for expanding access to formal financial products and services to the unbanked and underserved. In response, the Asian Development Bank (ADB), in partnership with the Asian Development Bank Institute (ADBI) and with support from the APEC Study Centre within the Griffith Asia Institute (GAI), organised the 12th Annual APEC Asia-Pacific Financial Inclusion Forum as a virtual event on 17 June 2022.
The Policy Dialogue was attended by representatives of more than 20 Asia-Pacific economies as well as nearly 30 policy and industry experts. Under the theme “The Role of Central Bank Digital Currencies” the roundtable-style dialogue focused on:
- understanding a CBDC and its applications;
- the opportunities and challenges associated with a CBDC as a driver for financial inclusion; and
- connecting a CBDC to the existing financial system to enable financial inclusion.
As a result of the dialogue, a series of proposed actions have been developed for the consideration of APEC policymakers and regulators. Some of the key issues addressed within these proposed actions include strategies for selecting appropriate design features of a CBDC to enhance its effectiveness in addressing financial inclusion; building the foundation for CBDC by addressing the critical pre-conditions for digital financial inclusion; and recognizing and managing risks associated with introducing a CBDC. These proposed actions will be delivered to APEC’s Finance Ministers and also form part of a more detailed report to be published by the ADB later in the year.
The Asia-Pacific Financial Inclusion Forum is an APEC Policy Initiative established by APEC’s Finance Ministers in 2010. Led by the ADB, it aims to deliver the objectives of APEC’s Finance Ministers’ Process related to financial inclusion. The initiative achieves this by facilitating the identification and development of concrete actions that policymakers and regulators can take to extend the reach and value of financial services to everyone, including those at the base of the economy who are most in need. Since its establishment, the initiative has contributed to policy reform and capacity building across the region across various aspects of financial inclusion, such as financial literacy, remittances, supply chain financing, consumer protection, credit information systems and digital financial services.
These proposed actions aim to support efforts within the FMP to accelerate financial inclusion as a priority area of APEC’s Cebu Action Plan as well as to progress the APEC’s Putrajaya Vision 2040 and priorities of the APEC Host Economy, Thailand-both of which call for greater progress in achieving greater inclusion, sustainability and digital innovation for the region.