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Asia and Pacific > India

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Cover Policy Papers
Central Bank Digital Currency: Progress And Further Considerations
International Monetary Fund. Monetary and Capital Markets Department
The paper briefs the Executive Board on the further considerations on CBDC. These cover the positioning of CBDC in the payments landscape, cyber resilience of the CBDC ecosystem, CBDC adoption, CBDC data use and privacy protection, implications for monetary policy operations, and cross-border payments with retail CBDC.
Keywords:
Capacity development; CBDC; Central bank digital currencies; Adoption; Collaboration; Cross-border payments; Cyber resilience; Data use and privacy protection; Monetary operations; Payment systems; Positioning CBDC; CBDC data; CBDC system; CBDC adoption; CBDC design; data use; position CBDC vis-à-vis; Digital financial services; Monetary base; Global
Cover FinTech Notes
Positioning Central Bank Digital Currency in the Payments Landscape
Manisha Patel
,
Safari Kasiyanto
, and
Andre Reslow
The IMF is frequently approached by central banks seeking guidance on the balance between central bank digital currency (CBDC), fast payment systems (FPS), and electronic money (e-money) solutions. Common questions arising include: Do central banks need a CBDC when already equipped with other well-established digital payments systems? For central banks with less-developed solutions: Should central banks establish one system over the other? This discussion is then compounded by the reality of constrained resources. This note focuses on the comparison of retail CBDC—that is, the presence of digital central bank money available to the general public—with FPS and e-money systems from a payments perspective, and how CBDC may support a jurisdiction’s vision on payments in the digital age. The note does not seek to advocate for CBDC over an FPS or e-money. The balance of arguments for any one system may change over time, and the choice may not be mutually exclusive in many jurisdictions. In the future, it is possible to envisage the coexistence of an FPS, e-money, and CBDC in many payment landscapes across the world. Through good design, all three systems could meet central bank objectives such as payments efficiency and supporting financial inclusion; some benefits are unique to CBDC, such as maintaining access to central bank money in an increasingly digitalized age. While central banks will make choices unique to their circumstances, it remains important for central banks to establish a strategy that allows them (at minimum) to monitor trends and core benefits of multiple solutions as developments occur, to allow them to plan, adapt, and drive developments in their payments landscape.
Keywords:
CBDC; Central bank digital currency; central bank; fast payments; FPS; e-money; digital currencies; digital payments; payment systems; Annex I. payment system case; positioning central bank digital currency; IMF Fintech Note 2024/006; infrastructure provider; payment infrastructure; Central Bank digital currencies; Monetary base; Digital financial services; Global
Cover FinTech Notes
Central Bank Digital Currency Adoption: Inclusive Strategies for Intermediaries and Users
Tayo Tunyathon Koonprasert
,
Shiho Kanada
,
Natsuki Tsuda
, and
Edona Reshidi
Among the countries that have launched central bank digital currency (CBDC) or are conducting large-scale pilots, adoption remains slow and limited due to various challenges such as lack of public awareness and trust, preference for existing payment methods, and inadequate incentives for intermediaries. Central banks cannot take it for granted that CBDC, once launched, will be adopted and scaled up easily. Forming part of the CBDC Virtual Handbook, this paper aims to encourage policymakers to consider CBDC adoption early on, by arguing that successful CBDC adoption hinges not only on technical readiness and operational robustness, but also on strategic policy and design choices that target end-user and intermediary involvement from the outset. The paper introduces The REDI Framework which outlines various regulatory strategies, education/communication initiatives, design/deployment choices, and incentive mechanisms to prepare for CBDC adoption.
Keywords:
Central bank digital currency; CBDC; Adoption; Intermediaries; Incentives; central bank digital currency adoption; CBDC adoption; IMF Fintech Note 2024/005; eAUD payment; central bank of Peru; Central Bank digital currencies; Currencies; Payment systems; Digital financial services; Financial inclusion; Global; Africa
Cover Finance & Development
Finance & Development, September 2024: Productivity and How to Revive It
International Monetary Fund. Communications Department
Productivity must play a more important role in driving sustained growth as our societies age. But there’s no consensus on how to reverse the broad slowdown in productivity growth seen across almost all countries over the past 20 years. F&D magazine’s September issue invites leading thinkers to examine productivity from multiple angles, including dynamism, innovation, demographics, and sustainability.
Keywords:
Productivity; total factor productivity; demographics; sustainable growth; economic growth; dynamism; innovation; international cooperation.; productivity gain; understanding productivity growth; productivity growth rebound; IMF photo; low-productivity firm; TFP advancement; Emerging and frontier financial markets; Tax avoidance; Global; West Africa; Europe; Central Asia; Asia and Pacific
Cover IMF Working Papers
Programmability in Payment and Settlement
Xavier Lavayssière
and
Nicolas Zhang
Programmability in payment and settlement has yet to realize its potential to support policy goals such as efficiency, safety, and innovation. This paper proposes a comprehensive framework for understanding and evaluating programmability. It explores two key dimensions: external programmatic access, which is the ability for external participants to access the system data and functions with code, and internal programmatic capabilities, the extent to which internal execution of programs is supported and guaranteed. By developing strategies based on these dimensions, financial institutions, regulators, and related actors can better improve resilience, reduce costs and interoperability, all while managing associated risks. The resulting hybrid systems are coordinated efforts balancing the advantages of permissionless blockchains, such as composability, with regulatory requirements and a wider range of technologies. The paper describes these programmatic models to inform and guide the development of digital finance, bridging policy discussions with technical considerations.
Keywords:
Programmability; Tokenization; Automation; Payment; Settlement; closed-loop payment system; blockchain infrastructure; payment category; settlement mechanism; financial asset; settlement system; Smart contracts; Payment systems; Blockchain and DLT; Global
Cover IMF Working Papers
The Economic Impacts and the Regulation of AI: A Review of the Academic Literature and Policy Actions
Mariarosaria Comunale
and
Andrea Manera
We review the literature on the effects of Artificial Intelligence (AI) adoption and the ongoing regulatory efforts concerning this technology. Economic research encompasses growth, employment, productivity, and income inequality effects, while regulation covers market competition, data privacy, copyright, national security, ethics concerns, and financial stability. We find that: (i) theoretical research agrees that AI will affect most occupations and transform growth, but empirical findings are inconclusive on employment and productivity effects; (ii) regulation has focused primarily on topics not explored by the academic literature; (iii) across countries, regulations differ widely in scope and approaches and face difficult trade-offs.
Keywords:
Artificial Intelligence (AI); labor market; task exposure; productivity; regulation; governance.; productivity effect; regulation of AI; AI system; AI model; AI technology; Artificial intelligence; Machine learning; Automation; Global
Cover Staff Discussion Notes
Gen-AI: Artificial Intelligence and the Future of Work
Mauro Cazzaniga
,
Florence Jaumotte
,
Longji Li
,
Giovanni Melina
,
Augustus J Panton
,
Carlo Pizzinelli
,
Emma J Rockall
, and
Marina Mendes Tavares
Artificial Intelligence (AI) has the potential to reshape the global economy, especially in the realm of labor markets. Advanced economies will experience the benefits and pitfalls of AI sooner than emerging market and developing economies, largely due to their employment structure focused on cognitive-intensive roles. There are some consistent patterns concerning AI exposure, with women and college-educated individuals more exposed but also better poised to reap AI benefits, and older workers potentially less able to adapt to the new technology. Labor income inequality may increase if the complementarity between AI and high-income workers is strong, while capital returns will increase wealth inequality. However, if productivity gains are sufficiently large, income levels could surge for most workers. In this evolving landscape, advanced economies and more developed emerging markets need to focus on upgrading regulatory frameworks and supporting labor reallocation, while safeguarding those adversely affected. Emerging market and developing economies should prioritize developing digital infrastructure and digital skills
Keywords:
Artificial Intelligence; Labor Market; Job Displacement; Income Inequality; Advanced Economies; Emerging Market Economies; Low-Income Developing Countries; AI preparedness index; AI benefit; AI exposure; ICT employment share; AI adoption; Emerging and frontier financial markets; Income; Global; Africa
Cover Policy Papers
IMF and World Bank Approach to Cross-Border Payments Technical Assistance
International Monetary Fund. Monetary and Capital Markets Department
and
World Bank
The G20 had made enhancing cross-border payments a priority. Faster, cheaper, more transparent and more inclusive cross-border payment services have the potential to be transformative for citizens and economies across the world. The Roadmap for Enhancing Cross-Border Payments, launched in 2020, is the first attempt by the international community to address the challenges faced by cross-border payments in a holistic way. A key foundational element in the Roadmap was the publication by the FSB of 11 quantitative targets to define the Roadmap’s aims and create accountability. Technical Assistance (TA) plays a critical role in helping achieve the Roadmap targets. TA relates closely to, and builds on, the IMF’s and World Bank’s respective missions. This paper outlines a multi-year strategy to provide TA in order to meet the cross-border payments targets. The paper (1) details the important role TA plays in achieving the Roadmap targets; (2) summarizes stocktakes conducted by the IMF and World Bank of recent and ongoing TA supporting cross-border payments; and (3) explains the IMF’s and World Bank’s approaches to cross-border payments TA. The IMF and World Bank commit to collaborating, coordinating, and complementing each other on cross-border payments TA wherever possible and appropriate at country/project level.
Keywords:
Cross-border payments; stocktake; technical assistance; payment systems; IMF TA approach; strengthening World Bank TA; IMF TA mission; TA program; IMF-World Bank; TA mission; cross-border payments TA; Anti-money laundering and combating the financing of terrorism (AML/CFT); Remittances; Central Bank digital currencies; Global
Cover Staff Climate Notes
Is the Paris Agreement Working? A Stocktake of Global Climate Mitigation
Mr. Simon Black
,
Ian W.H. Parry
, and
Karlygash Zhunussova
Urgent and aggressive action to cut greenhouse gas emissions this decade is needed. As countries take stock of the Paris Agreement, this Note provides IMF staff’s annual assessment of global climate mitigation policy. Global ambition needs to be more than quadrupled: emissions cuts of 50 percent below 2019 levels by 2030 are needed for 1.5 degrees Celsius, but current targets would only achieve 11 percent. We provide options for ratcheting-up ambition equitably. Implementation could be accelerated via agreements on minimum carbon prices. Drastic increases in mitigation investment are needed, requiring policies to shift private sector incentives. Climate finance should be scaled-up, with a new goal aligned with needs in developing countries. The development and diffusion of low-carbon technologies should be accelerated collaboratively. Overall, the Paris Agreement is making progress, but a response to the Global Stocktake that prioritizes decisive action this decade is critical.
Keywords:
Paris Agreement; climate mitigation; carbon pricing; climate finance; low-carbon technology; climate investment; IMF staff climate note; IMF staff climate NOTE 2023/002; mitigation policy; Policy package; Greenhouse gas emissions; Climate change; Global
Cover IMF Working Papers
Predicting the Law: Artificial Intelligence Findings from the IMF’s Central Bank Legislation Database
Khaled AlAjmi
,
Jose Deodoro
,
Mr. Ashraf Khan
, and
Kei Moriya
Using the 2010, 2015, and 2020/2021 datasets of the IMF’s Central Bank Legislation Database (CBLD), we explore artificial intelligence (AI) and machine learning (ML) approaches to analyzing patterns in central bank legislation. Our findings highlight that: (i) a simple Naïve Bayes algorithm can link CBLD search categories with a significant and increasing level of accuracy to specific articles and phrases in articles in laws (i.e., predict search classification); (ii) specific patterns or themes emerge across central bank legislation (most notably, on central bank governance, central bank policy and operations, and central bank stakeholders and transparency); and (iii) other AI/ML approaches yield interesting results, meriting further research.
Keywords:
central bank legislation; central banking; artificial intelligence; machine learning; Bayesian algorithm; Boolean algorithm; central bank governance; law and economics; ML approach; IMF central bank transparency code; IMF Central Bank Legislation Database; capital markets Department; approaches to analyzing pattern; CBLD data flow; Central bank autonomy; Central bank transparency; Global