A discussion paper from the Bank of Canada highlights the challenges central banks might face in achieving financial inclusion through central bank digital currency (CBDC). The paper identifies three types of inclusion necessary for universally accessible payments: financial inclusion, digital inclusion, and practical accessibility. The study notes that unless all three aspects of accessibility are considered, certain segments of the population may still face disadvantages with CBDC introduction. The challenges involve issues such as proximity to financial institutions, digital literacy, cognitive load, usability, and the needs of specific population segments.

Bank of Canada Study Emphasizes Challenges in Achieving CBDC Financial Inclusivity


A discussion paper from the Bank of Canada emphasizes the challenges central banks might face in achieving financial inclusion through central bank digital currency (CBDC). The paper, titled "Understanding Barriers to the Adoption of Digital Payments and CBDC: The Needs of Specific Population Segments," identifies three types of inclusion necessary for universally accessible payments: financial inclusion, digital inclusion, and practical accessibility.


The study notes that unless all three aspects of accessibility are considered, certain segments of the population may still face disadvantages with CBDC introduction. The challenges involve issues such as proximity to financial institutions, digital literacy, cognitive load, usability, and the needs of specific population segments.


The authors of the paper argue that central banks will face unfamiliar and nontraditional challenges to create an inclusive CBDC. They state that "the number of individuals who face barriers or exclusion is much larger than was previously assumed." Financial institutions may not have an incentive to address the needs of those who are underserved.


The paper points out that financial literacy and ease of use are critical factors. For example, First Nations youth may have digital access but be less skilled in using digital technology than their non-Indigenous peers. Moreover, cognitive load and other usability issues are potential barriers to accessibility, especially as the population ages.


The study suggests that overcoming these challenges requires deeper research into design for cognitive accessibility. The delivery of services, rather than the nature of CBDC itself, poses challenges that central banks need to address.


The discussion paper is part of ongoing research into the implications and challenges associated with CBDC adoption, emphasizing the importance of understanding the diverse needs of the population to achieve meaningful financial inclusion.