Increasing monetary policy flexibility with a retail CBDC

Xie Taojun and Ammu George

IN THE past week, the Bank for International Settlements (BIS) released the results of a survey on Central Bank Digital Currency (CBDC). Two-thirds of 81 central banks are actively interested in CBDCs, with many currently developing or testing retail CBDCs. The survey shows monetary policy implementation as a key motivation for the central banks to consider retail CBDC issuance.

In this regard, the November 2021 paper from the Monetary Authority of Singapore (MAS) on assessing the economic case for retail CBDCs in Singapore becomes relevant. While acknowledging that the CBDC payment landscape would eventually evolve, the report says that Singapore has no “urgent need” for a retail CBDC.