Discussion Paper Details

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Title: Rise of the central bank digital currencies: drivers, approaches and technologies

Author(s): Raphael Auer, Giulio Cornelli and Jon Frost

Publication Date: October 2020

Keyword(s): CBDC, Central bank digital currency, central banks, digital currency, distributed ledger technology, international payments, monetary policy, Payments and technology

Programme Area(s): International Macroeconomics and Finance and Monetary Economics and Fluctuations

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.

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Bibliographic Reference

Auer, R, Cornelli, G and Frost, J. 2020. 'Rise of the central bank digital currencies: drivers, approaches and technologies'. London, Centre for Economic Policy Research.