Design considerations for central bank digital currencies

Central bank digital currencies (CBDCs) are being explored and, in some cases, piloted by central banks around the world. To become a contributing part of our future world however, they must be paired with an extremely resilient, secure and performant infrastructure that has the ability to onboard, authenticate and support users on a massive scale. As central banks look toward designing, developing and implementing CBDCs, they must give careful attention to certain elements of policy and technical design, especially those related to:

  • Ledger infrastructure – central banks will want to be careful to balance their need for control over the currency with consumer privacy rights.
  • Wallets and funds/key custody – consumers will need a secure way to hold their funds and send transactions.
  • Privacy – a CBDC can potentially reveal significantly more information about individuals’ transactions to central banks than existing systems do. Consumer privacy is an issue of major importance.
  • Monetary policies – there are still uncertainties over how a CBDC will affect monetary policy implementation and transmission. These uncertainties suggest using a cautious approach going forward until this is better understood.
  • Future opportunities for innovation – there will be many opportunities for innovation using a CBDC. Central banks need to remain open to them in order to maximize the efficacy of implementing such a currency.