Central Bank Digital Currencies Research
Aim & Objectives
CBDCs have the potential to revolutionize the way we interact with money, but there are also several challenges that need to be addressed before they can be widely adopted. Research can play a key role in identifying and addressing these challenges and helping to shape the future of CBDCs.
- Our research will assess the potential impact of CBDCs on the financial system, including their effect on monetary policy, financial stability, and financial inclusion.
- Our Project research will develop innovative CBDC designs that explore various features, such as programmable money, privacy-preserving technologies, and offline functionality.
- The research will also explore regulatory and legal challenges associated with CBDCs, including AML/CFT compliance, data protection, and intellectual property rights.
- The research will also help identify and promote opportunities for innovation and competition in the CBDC space, which could lead to the development of new and innovative products and services.
Rigorous and comprehensive research will ensure that CBDCs are designed, implemented, and used to benefit the global economy and promote financial inclusion.
CBDC Designs and Operating Models
The design and operating model of a CBDC will be critical factors in determining its success or failure. The design and operating model of a CBDC will need to balance the potential benefits with the risks and challenges carefully. Central banks and private sector will need to work together to develop a CBDC that is well-designed, secure that meets the public’s needs.
Inclusive CBDC design and operating model which may enable financial inclusion, instant accountant settlement, and resilience.
- Enhanced efficiency and speed of payments-based CBDCs to enable instant and secure payments could reduce the cost and time associated with traditional payment methods.
- Financial inclusion: CBDCs could make it easier and cheaper for people to access and use financial services, which could promote financial inclusion.
- Greater resilience of the financial system: CBDCs financial system resilience.
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Privacy concerns: CBDCs could raise privacy concerns, as central banks would have access to a large amount of data about transactions.
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Cybersecurity risks: CBDCs could be vulnerable to cyberattacks, which could disrupt the financial system.
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Competition with private sector payment providers: CBDCs could compete with private sector payment providers, which could raise concerns about market competition and innovation.
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Governance and oversight: The governance and oversight of CBDCs will need to be carefully considered to ensure that they are operated in a safe, sound, and transparent manner.
Cross-border and cross-chain interoperability of central bank digital currencies (CBDCs) is a crucial aspect of their potential success and widespread adoption
Cross-chain interoperability will enable CBDCs issued by different central banks to communicate and exchange data, facilitating frictionless transactions between different digital assets.
Cross-border interoperability will allow CBDCs to integrate with existing payment systems and currencies, enabling seamless cross-border transactions without the complexities of foreign exchange and intermediaries. This would promote financial inclusion, enhance global trade, and reduce remittance costs.
Investigating;
- Atomic swaps: These mechanisms may allow for direct peer-to-peer exchanges of CBDCs without intermediaries, enhancing transaction efficiency.
- Cross-chain bridges: These protocols may enable asset transfers between blockchain networks, facilitating interoperability between CBDCs issued on different chains.
- Blockchain-based oracles: These decentralized data feeds provide reliable and secure information about CBDC balances and exchange rates, enabling smart contracts to execute cross-border transactions.
Identifying and assessing potential risks and benefits: Publications will thoroughly examine the potential risks and benefits of CBDCs, allowing central banks to make informed decisions about whether and how to pursue CBDC issuance.
Evaluating different CBDC design options: Publications will present and analyze various CBDC design options, including considerations for privacy, security, interoperability, and governance, helping central banks choose the most suitable design for their specific context.
Impact on the financial system: Publications will provide the impact of CBDCs on the financial system, including implications for monetary policy, financial stability, and financial inclusion, enabling central banks to mitigate potential risks and maximize benefits.
Lesson Learned Reports: Publications will provide insights into the experiences of other countries that have already issued or are exploring CBDCs, allowing central banks to learn from successes and challenges and make informed decisions based on empirical evidence.
Handbook of CBDC: Publications will offer guidance on developing and implementing CBDCs, including considerations for technology infrastructure, regulatory frameworks, public education, and stakeholder engagement.
Identifying areas for further research: Publications will highlight gaps in knowledge and areas for further research, enabling central banks to prioritize research efforts and address critical questions related to CBDCs.
