In mid-July, bankers, economists, payments service providers, and experts across the payments industry gathered at the Atlanta Fed for a Payments Inclusion Forum. As a summer intern, I was fortunate to attend and hear perspectives on how to expand access to our modern payments system to the 5.9 million American households without bank accounts and to other households with inadequate access to traditional financial services. Proposals included enhancing financial and technological education, expanding internet access in low-income communities, and improving protections against fraud. This got me curious about central bank digital currency (CBDC), which, despite not having a current role in the US economy, has been much discussed and researched.
The concept of a CBDC, defined as "a digital liability of [a central bank] that is widely available to the general public, 
" has ignited the payments world with the potential to provide consumers and businesses with a completely digital dollar. CBDC in the United States is purely speculative: the Federal Reserve has stated that it will not issue CBDC without support and authorization from Congress and the executive branch. Still, CBDC has sparked both excitement and skepticism around its potential to further financial inclusion—that is, employing processes and pricing that ensure ease of access to and availability and use of the formal financial system for all members of an economy.
Unbanked households cite not meeting minimum balance requirements, high bank fees, and inconvenient branch locations as reasons for their status, according to a report from the FDIC . These all seem like issues that CBDC could address with potential features like no or low balance requirements or fees. Researchers from the Dallas Fed , for example, modeled a CBDC designed to provide access to electronic payments for unbanked households and found it had the potential to increase inclusion in this area.
Other obstacles to inclusion could be more difficult to address via CBDC. According to the same FDIC report, about one-third of unbanked households report a lack of trust in banks and worry about privacy. More than half of unbanked households have no interest in holding a bank account whatsoever. If CBDC is not accessible to those without bank accounts, it will not successfully increase financial inclusion.
A paper from the Kansas City Fed recommends creating access points for CBDC outside of financial institutions to accommodate these households. One question: Would households that distrust banks feel differently about government-issued CBDC? Another challenge is associated with lack of home internet access , so an inclusive implementation of CBDC would need an effective on- and offline path, such as stored-value cards or cash.
Finally, there's the question of awareness and adoption of CBDC. One survey finding lack of awareness reported that nearly three-quarters of Americans are not familiar with CBDC. In addition, most unbanked households do not use services like person-to-person (P2P) payments, so they could be equally unlikely to adopt CBDC. Only 18.1 percent of unbanked households used P2P payments in 2021 compared to 47.7 percent of banked households, per the FDIC. Analogously, adoption of CBDC has been low in in Nigeria, the largest country to fully implement a CBDC, with only 0.8 percent of active bank accounts adopting.
CBDC could be effective in addressing financial inclusion. However, success would require a nuanced approach to product design, pricing, and consumer education—an approach, in other words, not that unlike requirements for other efforts to assure access to convenient, safe, and affordable financial products for everyone.
By Jacob Coleman, a rising junior at the University of Florida and summer intern in the Retail Payments Risk Forum at the Atlanta Fed