casting light on central bank digital currency ”, imf staff discussion note no. 18 / 08, november. barriers ( such as a lack of access to the required technologies, a strong resistance to adopt them or simply a strong preference for cash ) may leave individuals out of the financial and payments system. although carefully - designed and rightly - implemented cbdcs reduce its likelihood, the materialization of operational risks remains a possibility. this could translate into a burden for the reputation ( and credibility ) of the central bank. striking a right balance between the anonymity and traceability of transactions using cbdcs may prove elusive. at one extreme, full anonymity, while protecting user privacy, may facilitate the execution of illegal activities. at the other end, perfect traceability may hinder interest in cbdcs from users who, for personal and perhaps completely legitimate reasons, prefer to keep part of their transactions unrecorded. should the adoption of cbdcs be successful and not, at least to a significant extent, offset by a commensurate decline in physical coins and banknotes in circulation, the central bank ’ s balance sheet would be expanded. this could imply additional financial risks for the monetary authority as its exposure to the banking system and other security issuers increases while, depending on the size of the expansion, distortions akin to those observed in financial markets linked to the quantitative easing programs of recent may not be ruled out. the issuance of cbdcs is not free of legal uncertainties either. further to the legislative reforms that would be required to equip central banks with the authority to issue this sort of money in the vast majority of jurisdictions, 7 it remains unclear how much of a burden account - based cbdcs would imply for these institutions should they become bound by law to comply with existing regulations ( such as those related to anti - money laundering and combating the financing of terrorism, or aml / cft ). in addition, given cbdcs legal tender status, difficulties may arise regarding its enforcement, as not necessarily every agent in the economy will have available the means to accept it at all times. lastly, there is a broad consensus in the community regarding the need for further research on, and careful consideration of, the potential implications of cbdcs for interest rates, exchange rates and other asset prices in general, including the relative price between the digital and physical versions of a given currency. 8 beyond the above - noted issues, there

desire to learn about cbdcs and their implications at this stage, central bank interest in these instruments has been kindled by a combination of factors. one of the most important, particularly among some advanced economies, is the protracted decline in the use of cash and the consequent need to adapt to this situation. 5 in addition, the possibility that privatelyprovided electronic means of payment take place in a context of poor competition, has in some cases stimulated central banks ’ interest in cbdcs. further to the above, a number of other possible advantages of cbdcs have been identified. the potential to enhance the safety of the payments system through a back - up given mounting operational risks in some segments, or its cost effectiveness, by saving on the distribution of cash, are included among them. in other instances, particularly amongst emerging market and in what follows, these remarks will concentrate on the case of general - purpose cbdcs, with use aimed primarily at retail operations by the public at large. while restricted - access cbdcs intended for wholesale payment and settlement transactions are also being explored, it should be noted that they have yet to be proven as a superior alternative to existing technologies and infrastructures. also worth mentioning is the case of ecuador, whose cbdc was issued between 2015 and 2018, although with muted success due to low acceptance rates from users in a highly dollarized economy. see khiaonarong, t. and d. humphrey ( 2019 ) : “ cash use across countries and the demand for central bank digital currency ”, imf working paper no. 19 / 46, march. developing economies, cbdcs are seen as a means to ameliorate outstanding gaps in financial inclusion of important segments of their populations. moreover, depending on their specific design, such as the level of transaction traceability ( or, conversely, anonymity ), cbdcs could also help counter the proliferation of illegal activities. notwithstanding the appeal that cbdcs may gather on the basis of these and other favorable attributes, important negative implications must be acknowledged as well. in general, these relate to the potential effects on the role that central banks play in a wide array of activities, some of them closely related to their core functions in the economy. in particular, the issuance of cbdcs could lead these institutions to operate directly in the intermediation of financial resources with the public. naturally, such abrupt deviations from the traditional role of central banks carry important risks