Rise of the Central Bank Digital Currencies: Drivers, Approaches and Technologies

44 Pages Posted: 3 Nov 2020

See all articles by Raphael Auer

Raphael Auer

Bank for International Settlements (BIS)

Giulio Cornelli

Bank for International Settlements (BIS)

Jon Frost

Bank for International Settlements; University of Cambridge - Cambridge Centre for Alternative Finance

Multiple version iconThere are 3 versions of this paper

Date Written: October 2020

Abstract

Central bank digital currencies (CBDCs) are receiving more attention than ever before. Yet the motivations for issuance vary across countries, as do the policy approaches and technical designs. We investigate the economic and institutional drivers of CBDC development and take stock of design efforts. We set out a comprehensive database of technical approaches and policy stances on issuance, relying on central bank speeches and technical reports. Most projects are found in digitised economies with a high capacity for innovation. Work on retail CBDCs is more advanced where the informal economy is larger. We next take stock of the technical design options. More and more central banks are considering retail CBDC architectures in which the CBDC is a direct cash-like claim on the central bank, but where the private sector handles all customer-facing activity. We conclude with an in-depth description of three distinct CBDC approaches by the central banks of China, Sweden and Canada.

Keywords: CBDC, Central bank digital currency, central banks, digital currency, distributed ledger technology, international payments, monetary policy, Payments, technology

JEL Classification: E42, E44, E51, F31, G21, G28

Suggested Citation

Auer, Raphael and Cornelli, Giulio and Frost, Jon, Rise of the Central Bank Digital Currencies: Drivers, Approaches and Technologies (October 2020). CEPR Discussion Paper No. DP15363, Available at SSRN: https://ssrn.com/abstract=3723552

Raphael Auer (Contact Author)

Bank for International Settlements (BIS) ( email )

Giulio Cornelli

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Jon Frost

Bank for International Settlements ( email )

Basel
Switzerland

University of Cambridge - Cambridge Centre for Alternative Finance ( email )

10 Trumpington Street
Cambridge, CB21QA
United Kingdom

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