Central Bank Digital Currencies

The Development of Central Bank Digital Currency in China: An Analysis

“…A report commissioned by the United States Congress and delivered by the Congressional Research Service (CRS) similarly ignores considerations of cash-like properties, which include the ability of a user of cash to directly possess and control it [4]. In its description of the differences between CBDC and the current system, the report seems to suggest that the primary weaknesses of the current system are counterparty risk and costs to users of money, such as personal convenience and system-level efficiency [4], and that those weaknesses constitute the main argument for CBDC. The report also asks where individuals "would be permitted to store and access CBDC" [4], suggesting that the choice would be between financial institutions and the central bank itself, thus setting out a straw man of only two options, as though no other options existed.…”

“…In its description of the differences between CBDC and the current system, the report seems to suggest that the primary weaknesses of the current system are counterparty risk and costs to users of money, such as personal convenience and system-level efficiency [4], and that those weaknesses constitute the main argument for CBDC. The report also asks where individuals "would be permitted to store and access CBDC" [4], suggesting that the choice would be between financial institutions and the central bank itself, thus setting out a straw man of only two options, as though no other options existed. The report completely ignores the possibility of non-custodial or "unhosted" wallets, which the US Financial Crimes Enforcement Network (FinCEN) had explicitly acknowledged as important in its 2020 consultation.…”

“…It is possible to design CBDC so that, like cash, it does not earn interest. An article published by the IMF argued that the extent to which CBDC competes with bank deposits is largely determined by whether it pays interest [72], a view echoed by the CRS report [4]. Operationally speaking, it would be natural to assume that CBDC assets would not be rehypothecated, as in most cases it is not possible for a central bank to make risky investments [73].…”

“…Around the world, various proposals aiming to inform the design of digital currency have emerged. In the United States, the central bank conducted a consultation [3], and Congress commissioned a report [4]. In the United Kingdom, the central bank and treasury conducted a joint consultation [5] following other consultations by the central bank in previous years [6,7], and Parliament conducted a separate consultation [8].…”

A Sustainable Approach to Delivering Programmable Peer-to-Peer Offline Payments

“…Even fiat money is becoming crypto; central banks and governments are working toward creating digital equivalents to traditional money. The set up of central bank digital currency (CBDC) [ 3 , 4 ] exploratory initiatives [ 5 , 6 ], such as BCE’s digital euro (D€) [ 7 , 8 ], aims at delivering the same exciting applications of the most modern cryptocurrencies while being under the umbrella of a risk-free environment brought about by regulatory bodies. As reported in [ 9 ], in mid-July 2020, at least 36 central banks have published CBDCs.…”