Central Bank Digital Currency
Deliver a more efficient, resilient and diverse payments system
Central Bank Digital Currency
Central Bank Digital Currency
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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.
“At nChain we believe that everyone should have access to their money no matter where in the world they are. We want to work with Governments and Central Banks to create a digital form of central bank currency for the betterment of humanity.”
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We are working with Central Banks to deliver a more inclusive, resilient and diverse payment systems for all.
Explore our Digital Cash and Digital Money products and the features and benefits they can bring to a CBDC solution.
Overview
Retail CBDC
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.
Wholesale CBDC
Central banks can improve efficiency and security within interbank clearing and settlement, while addressing issues of counterparty credit risk and liquidity. Wholesale CBDC can enable a financial future not possible with physical cash or incumbent electronic payment systems. Use cases for wholesale CBDC include:
- The clearing and settlement of trades originating from digital asset exchanges, including tokenised assets and commodities.
- Delivering the next generation of real-time gross settlement systems (RTGS) and deferred net settlement systems (DNSS).
- Enhancing cross-border payments while unlocking new ways to make and use payments.
Our Approach
A private permissioned CBDC on a public ledger
Digital cash is a peer-to-peer payment platform that facilitates faster and cheaper cash payments, eliminating the need for an intermediary to facilitate payments.
We achieve this by providing a token-based solution that allows cash to be held directly by the user without relying on a bank account.
To ensure full control over the use of tokens, our approach places a significant importance in defining the role of an issuer, who will be responsible for controlling and managing digital cash tokens, from issuance, distribution, and monitoring.
The product can be used by central banks to mint and issue retail central bank digital currencies.
How the Central Bank operates as the issuer
Benefits
Strengthen trust in an economy, introduce transparency and accountability, and improve the efficiency of money flows.
Counterfeit-resistant currency
Certify that money in circulation is officially issued and is legal tender through a tamper-proof ledger.
Regulatory-compliant monetary streams
Certify transactions in real-time and eliminate potential theft or fraud while creating an indelible log of all monetary transactions.
Efficient public spending system
Provide citizens with direct access to digital cash whilst preserving privacy and introducing transparency, integrity, and traceability of money.
Blockchain
Blockchain technology is the perfect partner for CBDC.
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.
Resources
If you want to learn more about CBDC from leading industry experts, nChain has two fantastic resources for you. Our playbook and masterclass series ensure you stay up to date and well informed. Simply click on the links below and sign up with just your email for either the playbook or masterclass or both.
CBDC Playbook
This 40-page comprehensive guide will help you understand how CBDC programs can be designed and implemented, and some of the key questions that need to be addressed to help ensure a successful CBDC implementation.
CBDC Masterclass Series
The nChain CBDC Tech Masterclass Series aims to provide both foundational principles, expert opinion and lively discussion around the technical considerations of CBDC and creating a more resilient payments system for all.
media
CBDC Panel Discussion, Dubai 2022
Central bank digital currencies were the focus of a panel discussion at the BSV Global Blockchain Convention in Dubai 2022.
Watch Simit Naik, Director of Strategy at nChain, and Lexington Blood, president of RTCore Inc discuss the need for CBDCs, their risks and the mitigation measures.
Our Partners
Domineum
Domineum Blockchain Solutions is a Distributed Ledger Technology Company providing Blockchain-as -a service solution.
RTCore
RTCore was designed to overcome the burden of batch-driven data-processing software and technologies by providing real-time transaction.
CBDC FAQ
Yes, our approach provides a mechanism for citizens to
hold digital cash directly, ensuring continuous access. It
is also possible for central banks to work with 3rd parties
to provide access and/or additional services to citizens,
thereby operating a two-tiered model.
Since its inception 11 years ago, our public ledger has
demonstrated 100% uptime. That reliability is possible
because of both the technical features and the economic
incentives of our technology. This creates a remarkably
resilient system that is well suited for the needs of CBDCs.
By creating a lower barrier to entry, our approach to CBDCs encourages innovation and competition, leading to increased payment diversity.
Since digital cash can be held directly by citizens without the need for financial institutions or accounts, our approach enables a greater percentage of the population to participate.
By building on a global interoperable network, our
approach offers low fees and high throughput, which
results in a highly effectively and highly cost effective
international payment system.
Our digital cash solution is pseudonymous, designed to
maintain the privacy of users, without full anonymity. This approach satisfies both the needs for individual privacy and government oversight.
Digital cash is a cost-effective, direct mechanism for
payments. As it is peer-to-peer in design, central banks
can use it to send cash directly to citizens.
Digital cash is cash. Therefore, like cash, there are limitations on the functions it can provide. A role for
commercial banks would still exist, particularly to provide monetary services and access to credit.
A CBDC does not create new forms of money. It can co-exist with physical cash and notes. Our solution simply facilitates the creation of a digital form of notes and coins using a distributed network and interoperates with money and digital money.
We believe that a CBDC is key in ensuring the financial
stability of the economy in response to the increase in
the use of cryptocurrency, stablecoins and other forms
of private and/or synthetic money. With a CBDC built on a public ledger, it becomes possible to introduce a payment service that lowers barriers to entry, substantially lowers costs and forms the basis of a more effective peer to-peer cash system.
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Get in touch with our team of experts today, and get help with central bank digital currency in your jurisdiction.