Research in Brief 122

Developing countries are driving the emergence of central bank digital currencies (CBDCs) – digital versions of sovereign currencies issued by central banks. While CBDCs can potentially improve financial inclusion, improve payment systems, and increase tax collection in lower-income countries, they are also associated with a complex combination of operational and security risks. This research sheds light on the tax implications of CBDCs, including the potential risks and benefits of their implementation. It outlines some of their key features and considers challenges common to revenue authorities in developing countries.

Ultimately, the paper argues that a) governments adopting CBDCs must ensure that the currencies are developed and implemented transparently, fairly, and consistently with broader public policy goals while attending to context-specific challenges, and b) tax authorities should exercise more influence on CBDC design and implementation to maximise tax system benefits and reduce the possibility of worsening current challenges and inequities. Summary of ICTD Working Paper 189


Moyo Arewa

Moyo is the Programme Director for the Local Government Revenue Initiative (LoGRI). He was previously the Manager for Strategic Initiatives at (ICTD) and, before then, a Policy Development Officer at the City of Toronto. His tax research has focused on understanding how new technologies impact tax policy, administration, and public service delivery.

Celeste Scarpini

Celeste Scarpini is a Research Officer at the ICTD, and a PhD student at the Department of Economics, University of Sussex. Her main research interests relate to tax administration in sub-Saharan Africa, from technology adoption to data management and revenue collection strategies.

Kelbesa Megersa

Kelbesa Megersa holds a PhD in applied economics. He has an interest in broad areas of development research, with his main areas of expertise being in development finance, taxation, and private sector development in developing countries. Kelbesa has worked as a researcher at the Institute of Development Studies since 2019. Prior to that, Kelbesa worked as a doctoral and post-doctoral researcher linked to the Belgian Policy Research Group on Financing for Development at University of Namur. Kelbesa has years of policy research and consulting experience. He has provided research-based policy support for the development ministry of Belgium; the Foreign, Commonwealth and Development Office; and previously for the Department for International Development of the UK, among others.

Barry Cooper

Barry Cooper is a Technical Director at Cenfri, where he is in charge of the areas of payments and inclusive integrity. He has a particular interest in the development of digital payment instruments and currencies, with an emphasis on the impact of financial regulation on human rights. Barry started his career in the insurance industry before moving into banking. As Country Head of Consumer Bank Operations for a large global bank, he gained significant exposure to payment systems, wholesale and consumer banking. Barry is a legal advisor by profession.

Antonia Esser

Antonia Esser is a Senior Engagement Manager at Cenfri and she has conducted research on financial inclusion for over 12 years. Her work focuses on digital payments, with an emphasis on remittances and payment systems architecture. Her professional practice involves assisting payments stakeholders across Africa in making evidence-based decisions.

Megan Campbell

Megan Campbell is a Research Assistant at the International Centre for Tax and Development, and a JD/BCL candidate at McGill’s Faculty of Law.
Read the full paper