Central Bank Digital Currency, Poverty Reduction and the United Nations Sustainable Development Goals

Abstract

This chapter examines the role of central bank digital currency for poverty reduction and sustainable development. In the chapter, the author argues that a CBDC can eliminate poverty by first increasing financial inclusion which then gives poor people access to affordable credit and other basic financial services which they can use to improve their welfare, thereby enabling them to rise above poverty. This argument is valid only if a central bank digital currency is specially designed to incorporate features that increase financial inclusion for poor banked and unbanked adults. The argument may not apply to cases where a CBDC is not designed to increase financial inclusion as is the case in developed countries.