The International Monetary Fund published a Fintech Note on how practitioners can assess the domestic financial stability implications of introducing a retail central bank digital currency (CBDC). It offers a conceptual framework and practical guidance for evaluating how CBDC adoption and design choices can affect financial stability outcomes, without taking a view on whether countries should issue CBDC. The note maps six interrelated transmission channels through which CBDC can affect stability positively or negatively: banks’ funding structures and cost of funding and lending (liability and asset channels), bank and payment-provider fee income, the risk and intensity of runs in stress periods, information flows relevant to credit assessment and oversight, and payment-system competition and operational resilience. Synthesising existing quantitative studies, it reports that under scenarios of mild CBDC adoption the estimated impact on bank profitability is generally limited and overall stability effects are typically manageable, but results depend on country characteristics such as banking-sector competition, reliance on deposit funding and access to alternative funding. For applied work, it recommends starting with data-driven diagnostics of balance sheets, profitability and competition, then using balance-sheet analyses and more formal financial and macroeconomic models, and it outlines design and policy options to contain downside risks, including holding limits, tiered remuneration or fees, access parameters, intermediary-based distribution models, and continued use of prudential and crisis-management safeguards.

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