Central Bank Digital Currency: Further Navigating Challenges and Risks

Policy Papers, November 19, 2025

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Informs the Executive Board about recent developments in central bank digital currency (CBDC).
Summarizes key messages and findings from the third wave of CBDC virtual Handbook chapters published in November 2025.
The Handbook is financially supported by the Government of Japan and provides technical frameworks and guidance for policymakers, especially in emerging markets, to assess CBDC’s potential and tradeoffs.
The paper is not intended to evaluate CBDC’s overall appropriateness, which is left to policymakers given domestic circumstances.

Both retail (rCBDC) and wholesale (wCBDC) CBDC explorations are advancing, with wholesale projects gaining prominence.
Countries are in various stages of CBDC development, ranging from near-term issuance to pausing rCBDC efforts due to limited domestic needs.

Macro-financial topics:
- Implications of rCBDCs for (1) financial stability.
- Implications of rCBDCs for (2) payments competition.
Legal and regulatory themes:
- (3) Selected legal considerations.
- (4) Financial integrity.
Lessons and emerging areas:
- (5) Payment ecosystem resilience in fragile and conflict-affected states for CBDC.
- (6) Tokenized reserves.

Provides technical frameworks and guidance for policymakers, especially in emerging markets.
Addresses assessment of CBDC potential and tradeoffs; leaves ultimate policy decisions to domestic authorities.

Subject: Anti-money laundering and combating the financing of terrorism (AML/CFT), Central Bank digital currencies, Central banks, Crime, Financial sector policy and analysis, Financial sector stability, International reserves, Technology
Keywords: Africa, Anti-money laundering and combating the financing of terrorism (AML/CFT), Caribbean, CBDC Virtual Handbook, Central America, Central Bank digital currencies, Central bank digital currency, competition, financial integrity, Financial sector stability, fragile and conflict-affected states, Global, IMF policy, IMF Policy, IMF staff, International reserves, legal considerations, macro-financial implications, Pacific Islands, payment system resilience, South America, Southeast Asia, tokenized reserves, transparency policy