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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.


Reproduced with permission. © Regents of the University of Michigan, Center on Finance, Law & Policy 2021. All rights reserved.