Digital currencies and fintech: research

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Understanding the benefits and risks of digital currencies and electronic payments is important because new technologies and new players could affect the financial system. This in turn could influence how we work to fulfill our core functions. For this reason, we closely monitor fintech developments.

The Bank is conducting research related to a central bank digital currency (CBDC). This is part of its contingency planning to be ready to issue a CBDC in the future if the need were to arise.

Research by Bank staff is produced independently from the Bank’s Governing Council. It may therefore differ from official Bank views. The views expressed in research papers are solely those of the authors. No responsibility for them should be attributed to the Bank.

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Dynamic Consumer Cash Inventory Model

Staff Working Paper 2025-22 Kim Huynh, Oleksandr Shcherbakov, André Stenzel
We study consumer cash inventory behavior by developing a dynamic model of forward-looking consumers and estimating structural parameters of the model using detailed consumer survey data. Consumers facing holding and withdrawal costs solve a discrete-time continuous-control dynamic programming problem to optimally use cash at the point of sale.
Content Type(s): Staff research, Staff working papers Research Topic(s): Bank notes, Digital currencies and fintech, Econometric and statistical methods, Financial services JEL Code(s): D, D1, D12, D14, E, E4, E41, E42, G, G2, G21

2024 Methods-of-Payment Survey Report: Cash in an Era of Alternatives

Staff Discussion Paper 2025-12 Marie-Hélène Felt, Anna Chernesky, Angelika Welte
We present core findings from the 2024 Methods-of-Payment Survey, highlighting results from both the survey questionnaire and three-day shopping diary. Although cash holdings have increased in nominal terms, we find that cash usage remains unchanged since 2020. Mobile and other alternative payment methods continue to grow in importance.
Content Type(s): Staff research, Staff discussion papers Research Topic(s): Bank notes, Digital currencies and fintech, Financial services JEL Code(s): D, D8, D83, E, E4, E41

On the Programmability and Uniformity of Digital Currencies

Staff Working Paper 2025-18 Jonathan Chiu, Cyril Monnet
Central bankers argue that programmable digital currencies may compromise the uniformity of money. We develop a stylized model to examine this argument and the trade-offs involved in circulating programmable money.
Content Type(s): Staff research, Staff working papers Research Topic(s): Digital currencies and fintech, Payment clearing and settlement systems JEL Code(s): E, E5, E50, E58

A Retail CBDC Design for Basic Payments: Feasibility Study

Staff Discussion Paper 2025-9 Sriram Darbha, Cyrus Minwalla, Rakesh Arora, Dinesh Shah
We outline possible system architectures for an online retail central bank digital currency (CBDC) and identify one well-suited for basic payments. We analyze OpenCBDC 2PC, a representative system, finding such designs to be feasible, although some areas require further investigation. Our framing highlights other promising architectures for a retail CBDC.
Content Type(s): Staff research, Staff discussion papers Research Topic(s): Central bank research, Digital currencies and fintech JEL Code(s): E, E4, E42, E5, E51, O, O3

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