Report by the Consultative Group on Innovation and the Digital Economy (CGIDE) established at the BIS Representative Office for the Americas
This report by the Consultative Group on Innovation and the Digital Economy (CGIDE) discusses four main processes in a retail central bank digital currency (CBDC) architecture. These are: i) enrolling new users, ii) creating CBDC (cash-in), iii) destroying CBDC (cash-out) and iv) intra-ledger transfers.
Enrolment involves user registration on the CBDC platform by creating a CBDC wallet. This occurs through a wallet application (on a smartphone app, feature phone interface or hardware) designed to display CBDC balances, initiate and receive transfers (to/from other wallets, the real-time gross settlement (RTGS) system or cash) and receive transaction notifications.
Creating CBDC involves converting commercial bank money into CBDC, increasing balances in a user wallet registered on the platform through transfers from an account in the RTGS system or exchanges with local currency.
Destroying CBDC is the opposite process: CBDC is withdrawn from the platform and converted back into balances in a commercial bank or other account, or cash, decreasing the balance in a CBDC wallet. This is done through deposits to an RTGS account or as cash withdrawals.
The intra-ledger transfers involve movements of a certain value of CBDC from one wallet to another within the platform.
The architecture that this report lays out is for a hybrid model which allows for the division of labour between the central bank and private intermediaries. It allows for tiered know-your-customer (KYC) facilities, with wallets that use stricter KYC for individuals and businesses with higher transaction limits, and more basic wallets with simpler KYC requirements for more limited transaction sizes.
Privacy can be guaranteed by separating transaction from identity information, such that the latter remains with private intermediaries and users. This helps to reduce risks and ensure greater privacy protections than in other models. The report lays out an operational workflow (with flow diagrams) for the four main processes that can guide the development of these functionalities in practice, by central banks or vendors.
The report does not represent a policy position of CGIDE members and observers on the design, issuance or adoption of CBDC, or on technical standards for CBDCs. Instead, it is offered as a public good to advance the work on these issues and to share insights from a group of experts in the Americas region.
More details here: A proposal for a retail central bank digital currency (CBDC) architecture (pdf full text – 22 pages)
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
Many more interesting quotes in the video below:
