Central banks must carefully weigh the implications for financial stability and monetary policy of issuing digital currencies, according to a report from the Committee on Payments and Market Infrastructures (CPMI) and the Markets Committee.

The report considers a wholesale CBDC (for use in financial markets), and a general purpose CBDC (for use by the general public) and their implications for payments, monetary policy and financial stability.

It finds that wholesale CBDCs might be useful for payments but more work is needed to assess the full potential. Although a CBDC would not alter the basic mechanics of monetary policy implementation, its transmission could be affected.

A general purpose CBDC could have wide-ranging implications for banks and the financial system. Commercial banks' reliance on customer deposits may become less stable, as deposits could more easily take flight to the central bank in times of stress. Besides consequences for financial stability, effects on the efficiency of financial intermediation need to be carefully considered.

The report concludes that each jurisdiction considering the launch of a CBDC should carefully and thoroughly consider the implications before making any decision.