The authors thank the Bill & Melinda Gates 

Foundation for its support of this research. 

Thanks are also owed to the research assistants 

at the Center on Finance, Law & Policy, 

especially Bryan Ricketts. We are also grateful 

for the editorial assistance of Rebecca Cohen,

Daniel Rivkin, and Tracey Van Dusen.

ISSUE BRIEF 7: SHOULD CENTRAL BANKS USE

DISTRIBUTED LEDGER TECHNOLOGY AND

DIGITAL CURRENCIES TO ADVANCE FINANCIAL

INCLUSION?

I. Executive Summary

This brief is part of the Central Bank of the Future Project (“CBOTF”), a research

project that seeks to identify ways that central banks across the world can improve

access to financial products and services for underserved communities. CBOTF

engages with scholars, financial regulators and policy makers, think tanks, financial

institutions, fintech companies, consumer and community organizations, and other

stakeholders to examine how central banks can evolve to better promote financial

inclusion and financial health. CBOTF also works to find ways that businesses and

nonprofits can work alongside government sector efforts for financial inclusion. One

output is a series of working papers and policy briefs focused on specific topics.

This paper examines how central banks might use distributed ledger technology

(“DLT”) to improve access to safe and affordable financial products and services. We

consider how central banks might use DLT to advance objectives such as Anti-Money

Laundering (“AML”) compliance and discuss both central bank digital currencies

(“CBDC”) and private digital currencies. We consider implementation challenges for

these new approaches relating to interoperability, privacy, and efficiency. We

conclude that financial inclusion is far from an assured outcome: central banks must

work to ensure that any new technologies they adopt or foster do not exclude

marginalized groups and instead focus with intentionality on low-income households.

Moreover, difficult issues with respect to financial disintermediation, credit

availability, and financial stability would need to be addressed.

This paper proceeds in four parts. Part II provides a primer on DLT and CBDC. Part

III considers four ways central banks might use DLT to advance financial inclusion:

to accelerate payments, to improve identity verification, to formalize collateral, and

to lower compliance costs. Part IV focuses on DLT in the digital currency context,

analyzing non-fiat DLT-based digital currencies and proposals to create DLT and

non-DLT central bank digital currencies. Part V concludes.