The new research and education project, funded by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, will support the leadership of LMICs in the responsible design of CBDC and DPI. The research will be led by the MIT Laboratory for Economic Analysis and Design (MIT LEAD) and will feature a strategic collaboration around research socialization with Maiden Labs, a user-focused non-profit.

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“The CBDC network dynamics and standards being constructed today run the risk of not meeting LMICs’ needs and goals. As a result, they also run the risk of not benefiting from the unique experience, vision, and expertise of LMICs. These are infrastructure technologies and risks abound for all countries if we don’t get the foundations right. In addition to mitigating risks, we hope to identify opportunities to harness the innovative potential of CBDC and DPI to contribute to the Sustainable Development Goals,” remarks Klaus Prochaska, Head of Financial Systems Development, GIZ. 

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“For such systemic technologies, large-scale interdisciplinary research is rare,” adds Shira Frank, Director, Maiden Labs. “This collaboration aims to change that and to test an operational pilot for a global interdisciplinary forum with LMICs at the helm.” 

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Many LMICs have embarked on an ambitious and holistic exploration of CBDC and DPI that researchers working on the project believe could leapfrog, or add a unifying layer on top of, existing systems and technologies. In some cases, LMICs’ thinking around CBDCs blurs the boundaries between fast payment systems, mobile money, private sector platforms, retail CBDCs, wholesale CBDCs, and DPIs. 

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“LMICs unique perspectives in this domain have critical implications for the global stage,” says Prof. Rob Townsend, Primary Investigator, MIT LEAD. “Digital currencies and digital public infrastructures present a new paradigm around trade, economic activity, and social organization. This conversation is bigger than payments, than cryptocurrencies, than CBDCs. On an individual level, smart contracts can empower people by granting more flexibility, more automation, and lower costs. On a systemic level we require new designs to achieve safe and efficient coordination on a larger scale. Increased research between leading economists and computer scientists is critical, and an equal exchange between academics and central bankers is required to mitigate the risks and realize the innovative potential of this emerging field.”

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Synthesizing these insights, and complimenting other international initiatives in this area, the project’s first year will pilot new interactive models between policymakers, technologists, and economists. Activities will include: (1) in-depth research collaborations with two LMIC central banks, (2) a series of peer-knowledge exchange workshops with 10-20 LMICs, (3) a published CBDC and DPI curriculum for central banks integrating research from economics, computer science, and user research, and (4) a published report of research findings. 

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Ultimately, the project aims to: (1) surface and center LMIC expertise, efforts, and policies, ensuring they are an integral part of the global dialogue on digital financial infrastructure; (2) meet the growing LMIC demand for assistance, resources, and knowledge on these technologies; and (3) help establish dynamic CBDC and DPI standards centered in the economic context of LMIC needs and goals.

For more information, or to get involved, please contact Shira Frank.