Simply put: it is a digital form of central bank money that can operate alongside existing physical cash to provide improved financial access and security to all citizens.
Central banks provide trusted money to the public as part of their policy objectives. This money acts as a medium of exchange, a unity of account and a store of value. Historically, this has been accomplished by issuing physical cash.
With the use of blockchain technology, central banks can address the declining use of physical cash and the increase in new forms of private money with a centrally issued CBDC that is a better fit for the modern, digital era.
Central banks can issue a digital form of central bank money to complement the existing notes and coins they provide. A general-purpose, or a retail CBDC, provides a complementary means of payment for the public, alongside physical cash.
It also supports a more efficient, resilient and diverse domestic payments system.
Central banks can improve efficiency and security within interbank clearing and settlement, while addressing issues of counterparty credit risk and liquidity.
Use cases for wholesale CBDC include:
Wholesale CBDC can enable a financial future not possible with physical cash or incumbent electronic payment systems.
With our solution, each CBDC is created within its own permissioned environment where the central bank retains its role of issuer. The central bank maintains control of issuance, circulation and distribution of a nation’s currency.
Our approach provides flexibility in the way users can interact with the CBDC, either directly or indirectly through intermediaries.
The CBDC itself is secured and processed on a global, scalable public ledger. This ensures our solution is immutable, provides privacy controls and is interoperable. We also have a network of partners globally who can provide country-specific support and extra services where needed.
We work with financial institutions and governments to strengthen trust in an economy, introduce transparency and accountability, and improve the efficiency of money flows.
Certify that money in circulation is officially issued and is legal tender through a tamper-proof ledger.
Certify transactions in real-time and eliminate potential theft or fraud while creating an indelible log of all monetary transactions.
Provide citizens with direct access to digital cash whilst preserving privacy and introducing transparency, integrity, and traceability of money.
The island nation joins forces with nChain, Elas Digital, and Faiā to embark on a digital transformation project that includes creating a national digital ledger and registry using blockchain technology.
With blockchain technology, we can take a holistic approach to payment and data solutions. It allows us to simplify the payment system, increase efficiencies without reducing security.
By embedding data into payments, it allows us to deliver solutions that adhere to compliance and regulatory requirements, and provide central banks with access to more data to facilitate targeted and effective monetary and fiscal polices.
Find out more about our expertise on blockchain infrastructure.
In a recently published paper, titled 'Cashbacks falling from the sky: Can retail CBDC rollout widen central banks’ toolkit?', nChain Researcher Dr Vlad Skovorodov and former nChain Researcher Dr Zamid Aligishiev examine the feasibility of electronic cashback and varying cashback rates as facilitated by a potential retail central bank digital currency (CBDC) to enhance the economic toolkit for targeting inflation rates.