Digital currencies issued by central banks (CBDCs) raise a number of questions, ranging from deciding the scenarios in which such changes are desirable, to how they can effectively be implemented. A recent R3 webinar featured 12 leading experts participating in the most advanced CBDC projects in the world, including the IMF’s Tobias Adrian and the BIS’s Raphael Auer. They provided extensive insights into the future of CBDCs and this post highlights the key takeaways.
In particular, Tobias and Raphael illuminated four different models for CBDC operation. While Tobias focused his discussion on his proposal for a synthetic CBDC, where the private sector assumes the responsibility of CBDC issuance, Raphael focused on three architectures he has identified where the central banks itself issues the CBDC:
- Direct CBDC: Payments are operated by central banks.
- Intermediated CBDC: Central banks only operate wholesale accounts, retail payments are operated by the private sector, and central banks have no say in technical innovation.
- Hybrid CBDC: The private sector operates all payments by default and central banks only act as a backstop.
- Synthetic CBDC: There are narrow payment banks, which issue highly stable assets backed by reserves they hold at the central bank, which is similar to other stablecoin proposals. In this scenario, the private sector also still operates loans and payments.
Posted from Diigo: https://www.diigo.com/user/kiffmeister/Fintech