The Bank for International Settlements published a working paper using a discrete choice experiment in South Korea to estimate how consumers value payment-method features and to simulate likely demand for a hypothetical retail central bank digital currency (CBDC). Under a benchmark CBDC design, around 19% of respondents are predicted to choose CBDC as their most preferred payment method, with CBDC preferred over cash and mobile fast payments but less preferred than credit and debit cards; adoption rises to 27% when CBDC offers a discount rate similar to credit cards. The experiment surveyed 3,561 adults and varied nine attributes of hypothetical payment instruments, including issuer, form (banknote, plastic card, smartphone app), information disclosure, merchant acceptance, risk of loss, discount rate, payment delay, settlement timing, and monthly fee. Financial incentives dominate choice: monthly fees reduce selection probabilities by up to 14 percentage points, while discounts increase them by up to 11 percentage points. Non-monetary attributes also matter, with plastic-card and smartphone-app forms each increasing selection by about 7.5 percentage points versus banknotes, and higher acceptance and lower loss risk raising preference. In the CBDC simulations, reducing disclosure of personal and transaction information increases CBDC preference modestly (around 0.6–1.6 percentage points versus the benchmark), while higher discount rates increase CBDC preference by roughly 4–8 percentage points; simulated competitive responses by incumbents (zero credit-card monthly fee and a 3% mobile-payment discount) reduce CBDC preference by 1.1 percentage points. Robustness checks using a nested logit framework place CBDC’s share as the most preferred method at 15–23% in the benchmark design and 16–33% across alternative CBDC scenarios. Subgroup analysis finds limited differences by gender, education, and income, while age effects are more pronounced, including a stronger preference among older respondents for central bank issuance and for CBDC relative to mobile payments.
Bank for International Settlements 2025-10-01
Bank for International Settlements research predicts retail CBDC would beat cash but trail cards with 19–27% top-choice adoption in Korea
The Bank for International Settlements released a working paper analyzing consumer preferences for payment methods in South Korea, using a discrete choice experiment to simulate demand for a hypothetical retail central bank digital currency (CBDC). The study found that 19% of respondents would prefer CBDC over cash and mobile payments, rising to 27% if CBDC offers a discount rate similar to credit cards. Financial incentives, such as monthly fees and discounts, significantly influence consumer choice, with non-monetary attributes like form and acceptance also impacting preferences.