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Central Bank Digital Currencies: Five Lessons From Three Trailblazers

Experiences from the Bahamas, China and Nigeria help illuminate the path over rocky terrain
Hikers traversing a mountain ridge with several peaks in the background.

Like hiking any new mountain trail, exploration of the unknown can invoke excitement at reaching new heights but also fear at the thought of encountering obstacles along the way. Among central banks, this sentiment rings true for those exploring central bank digital currencies (CBDCs) for their respective markets. While most central banks are eager to test the relevance of CBDCs to alleviate contextual barriers to financial inclusion, doing so without full knowledge of the related risks and likely outcomes can be daunting enough to stop this exploration in its tracks.

Insights drawn from existing retail CBDC experimentation are useful in helping central banks navigate their own pathway. Drawing on the growing number of CBDC pilot tests and experiments since 2013, as well as findings from the latest AFI report on the role of CBDCs for financial inclusion in the developing world, this blog post consolidates key learnings to empower decision-makers on their CBDC journey.

Lessons learned along the way

Five key lessons can be learned from the journeys taken by the three trailblazer CBDC explorers – the Bahamas, China and Nigeria :

1. Design is critical in building ubiquitous usage, especially for incentivizing uptake by the hardest-to-reach segments.

Key barriers, such as poor connectivity and inadequate digital literacy, can exacerbate financial exclusion of vulnerable segments of the population. Central banks have needed to enhance their initial CBDC design in response to these challenges. For example, to address digital literacy issues, the Central Bank of the Bahamas incorporated SunCash’s PopPay, a mobile app that enables digital payments through facial recognition with no smartphone required. In China, the e-CNY can also be stored in hard wallets that are aimed at minimizing convenience and complexity barriers for the elderly community and children.

2. Initial pilots may require trade-offs between financial inclusion and scale.

Scale is critical for successful and sustainable adoption. In Nigeria and China, achieving this scale has meant sacrificing smaller, financially underserved consumer segments for larger, more digitally and financially savvy users as the primary target group for initial CBDC pilots.  The Central Bank of Nigeria did this by targeting banked populations during the first of its four-phase CBDC roll-out. The People’s Bank of China isolated its CBDC experiments to 23 of the most developed and urban cities in the country.

3. Industry buy-in and CBDC experimentation must go hand-in-hand.

The success of CBDCs hinges on buy-in from multiple stakeholders to drive awareness and ensure meaningful implementation. In 2022, such buy-in proved difficult in Nigeria, as the Central Bank observed “apathy” among commercial banks in promoting the e-Naira due to perceived revenue loss of transaction fees as the CBDC option wouldn’t attract these fees.

But what can cooperation look like? In China where a lot of scale has been reached, getting digital platforms such as Alipay and WeChat Pay on board has played an important role in demonstrating the power of trusted brands to build acceptance of digital financial innovations. The People’s Bank of China realized this early in their CBDC trials and has since used multiple private sector partners during the iterations of its pilots to encourage adoption, including WeBank and MyBank in 2021.

4. Iterate, iterate, and iterate some more.

All CBDC experiments are susceptible to unexpected challenges. Central banks won’t usually get it right the first time. In Nigeria, issues with the registration process left some clients disgruntled with the e-Naira. In the Bahamas, the Central Bank discovered structural barriers, including the geographical reach of existing telecommunication networks and their ability to account for local redundancies during power outages. This meant that offline payments could only be partially facilitated, so this step of the project had to be put on hold for further refinements. Being able to proactively identify deficiencies in a CBDC solution, and then work with partners to bridge those areas, is therefore essential to the success of a CBDC.

5. A proactive, fit-for-purpose and enduring awareness campaign is key for building trust among target users.

CBDC roll-outs must be accompanied by communication campaigns. A clear narrative around a CBDC is crucial in this age of online deception and misinformation. As the central bank is the face of the CBDC, it needs to take a lead role in educating the public  on the aims of CBDC and how people can get value out of using it. A multi-channel approach has proved a popular strategy among central banks, with TV and online channels being used for information dissemination. The Chinese, Bahamian and Nigerian Central Banks have all leveraged websites to store CBDC-related information as well as education content. The Bahamas has a dedicated CBDC website with instructional video content for users on how to engage with the Sand Dollar. The People’s Bank of China has also directly incentivized using their digital currency by providing red packets of free e-CNY to users.

Blazing the trail

Acknowledging the lessons learned by CBDC trailblazers can illuminate hazy pathways for central banks. The successes and missteps of these explorers will become a key contribution to developing an evidence-based policy tool.

As these insights make clear, implementing a CBDC can present many trade-offs and risks that require deep engagement with users.  Central banks will need to consider how to execute rollouts that achieve scale while incorporating ongoing feedback from pilots. They will also need to identify use cases for the CBDC and look at how those use cases will work together to supply, distribute and circulate digital value within a payment ecosystem.

Central banks should conduct their own feasibility studies on CBDC to determine what is right for their market. However, it is just as critical – if not more so – that more research be conducted on implementation best practices to inform experimentation and provide confidence in navigating the rough CBDC terrain.

To learn more about Cenfri’s research on CBDC feasibility and implementation, please reach out to Michaella Allen at

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