The Importance of Where Central Bank Digital Currencies Are Custodied: Exploring the Need of a Universal Access Device (original) (raw)
Related papers
Sustainability, Public Security, and Privacy Concerns Regarding Central Bank Digital Currency (CBDC)
Digital Transformation and the Economics of Banking Economic, Institutional, and Social Dimensions, eds. Piotr Łasak, Jonathan Williams, 2023
Over 100 central banks currently research or develop their own central bank digital currency (further CBDC). Four projects recently moved into the production phase. The introduction of CBDC by at least one major central bank in the coming years seems unavoidable, which would form a tipping point. CBDC would then enter the mainstream of the banking sector. This trend requires assessing CBDC projects broader than the central banks do. This chapter considers concerns regarding the introduction of CBDC and its design criteria. Addressing those issues at an early stage allows us to mitigate them. The most obvious concern concerns the central bank money’s public security in the era of growing cyber threats. The other evident concern concerns privacy. However, one particular angle of discussions on CBDC does not get enough attention – sustainability. This chapter assesses whether and how current CBDC projects include sustainability, public security, and privacy. It then addresses areas worth further development to increase the implementation of sustainability by the central banks. Finally, this chapter reconstructs a design of CBDC that would be most desired from the perspective of sustainability, public security, and privacy, showing how taking those perspectives into consideration influences social acceptance of CBDC.
Around 100 central banks currently research or develop their own central bank digital currency (further CBDC). Four projects recently moved into the production phase. The introduction of CBDC by at least one major central bank in the coming years seems unavoidable, which would form a tipping point. CBDC would then enter the mainstream of the banking sector. This trend requires assessing CBDC projects broader than the central banks do. This chapter considers concerns regarding the introduction of CBDC and its design criteria. Addressing those issues at an early stage allows us to mitigate them. The most obvious concern concerns the central bank money's public security in the era of growing cyber threats. The other evident concern concerns privacy. However, one particular angle of discussions on CBDC does not get enough attention-sustainability. This chapter assesses whether and how current CBDC projects include sustainability, public security, and privacy. It then addresses areas worth further development to increase the implementation of sustainability by the central banks. Finally, this chapter reconstructs a design of CBDC that would be most desired from the perspective of sustainability, public security, and privacy, showing how taking those perspectives into consideration influences social acceptance of CBDC.
Real World Economics Review , 2020
Central bankers as well as monetary reformers are discussing the introduction of central-bank issued digital currency in coexistence and competition with bank deposits (bankmoney). Among the reasons for this are the gradual disappearance of cash and a far-reaching loss of monetary control. However, a general shift to digital currency (DC) cannot be taken for granted. The paper discusses the conditions and design principles that are tipping the scales in the competition between bankmoney and DC. Relevant issues include access to and available quantities of DC, mutual convertibility of bankmoney and DC, parity of bankmoney with DC, how to deal with bank run situations, central-bank support and government warranties for bankmoney, deposit interest on DC, and the question of negative interest on DC. JEL codes E42, E52, E58, G21 Digital currency: cryptocoin or money-on-account? People have become used to hearing about digital currencies (DC) such as Bitcoin. These currencies are based on new technology known as distributed ledger and blockchain technology and are also referred to as cryptocurrencies because of the data encryption involved. Cryptocurrencies represent a radical alternative to the current banking system, in that they bypass retail banks and defy central-bank control from the outset. 1 Against this background, central banks are now thinking about producing their own DC. Initially, such central-bank issued DC was imagined in the technical form of cryptocurrency. 2 The new technology, however, is still in its infancy. 3 In comparison, tried and tested ways of managing account balances and payments from and to accounts are well suited for implementing DC. In the foreseeable future, central-bank issued DC is thus likely to take the form of account balances (money-on-account). In this context, "digital money" and "electronic money" are interchangeable terms. First design studies of DC were put forward by Barrdear and Kumhof of the Bank of England, the Swedish Riksbank and the Basel Bank for International Settlements, and were also presented at an early stage by monetary reformers and other economists. 4 The number of * The author is professor emeritus of economic sociology. 1 See Carney, 2018. 2 Cf. Andolfatto, 2015; Danezis and Meiklejohn, 2016; Bech and Garratt, 2017. 3 Related problems include the high volatility of cryptocoins, which arises from being used as speculative casino tokens rather than a general means of payment. The transfer of cryptocoins is not yet sufficiently fast, and is much too energy-intensive and thus expensive. Crypto trading platforms are vulnerable to hacker attacks, and legal questions of liability and identifiability are not entirely settled.
CENTRAL BANK DIGITAL CURRENCIES (CBDCs): POLICY OBJECTIVES AND CHALLENGES FOR IMPLEMENTATION
Sampath Sandeshaya, 2023
INTRODUCTION: Central bank digital currencies (CBDCs) are digital versions of physical currency that are being issued and regulated by central banks (Auer et al., 2022; BIS, 2020). Correspondingly, they are considerably secure and inherently not volatile, unlike crypto assets (Barrdear & Kumhof, 2022). Although CBDCs have gained the lime light as a new concept recently, they have in fact been around for three decades. In 1993, Bank of Finland launched the Avant smart card, an electronic form of cash. Even though the system was eventually dropped in the early 2000s, it can be considered the world’s first CBDC (IMF, 2022). At present, researches related to CBDCs proliferated globally, prompted by technological advances and a decline in the use of cash. Nowadays, Central banks all over the world are exploring potential benefits and means of improving the efficiency and safety of payment systems (Auer et al., 2022).
real-world economics review, issue no. 88, 10 July 2019, 76–90, 2019
Central bankers as well as monetary reformers are discussing the introduction of central-bank issued digital currency in coexistence and competition with bank deposits (bankmoney). Among the reasons for this are the gradual disappearance of cash and a far-reaching loss of monetary control. However, a general shift to digital currency (DC) cannot be taken for granted. The paper discusses the conditions and design principles that are tipping the scales in the competition between bankmoney and DC. Relevant issues include access to and available quantities of DC, mutual convertibility of bankmoney and DC, parity of bankmoney with DC, how to deal with bank run situations, central-bank support and government warranties for bankmoney, deposit interest on DC, and the question of negative interest on DC. JEL codes E42, E52, E58, G21 Digital currency: cryptocoin or money-on-account? People have become used to hearing about digital currencies (DC) such as Bitcoin. These currencies are based on new technology known as distributed ledger and blockchain technology and are also referred to as cryptocurrencies because of the data encryption involved. Cryptocurrencies represent a radical alternative to the current banking system, in that they bypass retail banks and defy central-bank control from the outset. 1 Against this background, central banks are now thinking about producing their own DC. Initially, such central-bank issued DC was imagined in the technical form of cryptocurrency. 2 The new technology, however, is still in its infancy. 3 In comparison, tried and tested ways of managing account balances and payments from and to accounts are well suited for implementing DC. In the foreseeable future, central-bank issued DC is thus likely to take the form of account balances (money-on-account). In this context, "digital money" and "electronic money" are interchangeable terms. First design studies of DC were put forward by Barrdear and Kumhof of the Bank of England, the Swedish Riksbank and the Basel Bank for International Settlements, and were also presented at an early stage by monetary reformers and other economists. 4 The number of * The author is professor emeritus of economic sociology. 1 See Carney, 2018. 2 Cf. Andolfatto, 2015; Danezis and Meiklejohn, 2016; Bech and Garratt, 2017. 3 Related problems include the high volatility of cryptocoins, which arises from being used as speculative casino tokens rather than a general means of payment. The transfer of cryptocoins is not yet sufficiently fast, and is much too energy-intensive and thus expensive. Crypto trading platforms are vulnerable to hacker attacks, and legal questions of liability and identifiability are not entirely settled.
The Six Ways to Build Trust and Reduce Privacy Concern in a Central Bank Digital Currency (CBDC)
Business digital transformation: Selected cases from industry leaders, 2023
This research found support for a model with six factors influencing trust in a CBDC and found that trust in the CBDC did indeed encourage its adoption. The six factors that influence trust in a CBDC identified in this research are the following: (1) Trust in the government and the central bank issuing a CBDC, (2) expressed guarantees for the user of a CBDC, (3) positive reputation of existing CBDCs implemented in other countries, (4) automation and reduced human involvement achieved by a CBDC technology, (5) trust-building functionality of a CBDC, and (6) privacy features of the CBDC wallet app and back-end processes such as anonymity.
Rosinara Ferreira, 2021
This paper will try to demonstrate that, the use of new digital technologies for the financial system with the Central Bank Digital Currencies (CBDC) initiative, should provide some protection to pre-existing laws that were built through the learning of several generations of legislators and socio-economic actors. However, looking ahead, we will see that to achieve a city of future it will be mandatory to anticipate an infrastructure composed of Law and Technology, which revises the traditional models of governance, law, and regulations, and mitigates the pertinent risks by rewriting history. The challenge arises in the face of Cryptocurrencies/Assets and Tokens, which have occupied a significant space in the digital world in the last years, and are outside the best practices implemented by OCDE, FATF regarding Know Your Customer (KYC), Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), Tax Evasion. There are a large and diverse number of potential reasons why central banks are investigating CBDCs, among them we will see that the replacement of physical currency is one of the milestones of this century for the city of the future.
The Curse of Central Bank Digital Cash
Journal of New Finance, 2022
This paper surveys the consequences of Central Bank Digital Currencies (CBDC) on personal liberty and privacy. The Central Banks' response to the advent of Bitcoin and other cryptocurrencies has profound implications for financial intermediation, monetary and fiscal policies, financial repression, and surveillance. More than allowing for meddling with money, a CBDC may enable meddling with human free will, posing grave threats to the preservation of freedom.
Scholars journal of economics, business and management/Scholars journal of economics, business amd management, 2024
Original Research Article Central Bank Digital Currencies (CBDCs) offer a promising solution to expand financial inclusion for the unbanked and underbanked populations globally. This paper explores the potential benefits of CBDCs in promoting financial access, including reduced transaction costs, increased accessibility in remote areas, and efficient government transfers. However, challenges like infrastructure limitations, privacy concerns, and regulatory frameworks need to be addressed for successful implementation. The paper examines ongoing pilot projects in Sweden and China, highlighting how these initiatives tailor CBDCs to specific national contexts. By overcoming these challenges and continuing research, CBDCs can become a powerful tool for financial inclusion, fostering economic empowerment and participation.
Journal of banking regulation, 2024
In an increasingly digitised world, and within the new reality of digital finance, a fully digitised public currency seems to be a natural step. To this end, central banks have been testing the possibility to issue a digital form of the traditional fiat currency (so-called Central Bank Digital Currency-CBDC). As these projects steadily progress, and in some cases, reach the implementation phase, a myriad of questions, from legal to macroeconomic, arise. This paper aims to focus, in particular, on two complementary and co-related aspects involving CBCDs: (i) how can the full digitalisation and centralisation of the transaction ledger be combined with privacy and (ii) to what extent CBDCs affect the allocation of burden and the responsibility over supervision of retail transactions. Eminently, the use of cash ensures a form of default privacy that protects the individual against State and private intrusion. While this privacy has caused concern, due to its criminogenic potential, and has been consequently limited by anti-money laundering (AML) regulations, the remaining cone of shadow cash guarantees is a crucial limit to control. In the context of a shifting financial system, undergoing deep transformation due to increasing datafication and decentralisation of the market, a new governance of financial supervision and record-keeping-up to now based on a unique and centralised ledger-is crucial to redefine the trade-off between financial integrity and privacy. This article will examine the origins and characteristics of CBDCs, to then analyse how the trade-off between control and privacy is set to reshape this new architecture.