Since 2020, a group of central banks, together with the Bank for International Settlements, have been exploring selected aspects of central bank digital currencies (CBDCs). As part of this joint work, the group shares insights and perspectives gained from the central banks’ individual analysis and experiments on a range of CBDC themes, including those more broadly related to payments modernization.
This report summarises the group’s discussion on several topics in relation to the system design of retail (also called general-purpose) CBDC arrangements. These may likely become relevant should a central bank consider developing a retail CBDC arrangement.
The report first provides some perspectives on overall system design and then focuses on four key issues essential for designing a well-functioning retail CBDC system: privacy, cyber security (including quantum computing), offline functionality and point of sale considerations. These issues are multi-dimensional and often interconnected.
Technical experimentation frequently highlights complementary policy choices that a jurisdiction may need to determine when it is designing or modernizing a payments system. Jurisdictions each have their own existing policy, legal, and regulatory frameworks, as well as their own policy objectives. For a given jurisdiction, addressing legal and public policy requirements as well as interactions and interconnectedness both within and beyond the system may be essential to ensure a coherent system design. The work of the group over the last 18 months has discussed those areas alongside technical capabilities to better understand the associated trade offs, without drawing specific policy conclusions. Despite progress to better understand the practicalities around these issues, challenges and open questions remain. In addition, for the purpose of developing a well-functioning retail CBDC system, there are other issues which should be addressed.