Design Choices for Central Bank Digital Currency: Policy and Technical Considerations / Sarah Allen, Srđjan Čapkun, Ittay Eyal, Giulia Fanti, Bryan A. Ford, James Grimmelmann, Ari Juels, Kari Kostiainen, Sarah Meiklejohn, Andrew Miller, Eswar Prasad, Karl Wüst, Fan Zhang.

Format:

Book

Author/Creator:

Allen, Sarah.

Contributor:

National Bureau of Economic Research.

Čapkun, Srđjan.

Eyal, Ittay.

Fanti, Giulia.

Ford, Bryan A.

Grimmelmann, James.

Juels, Ari.

Kostiainen, Kari.

Meiklejohn, Sarah.

Miller, Andrew.

Prasad, Eswar.

Wüst, Karl.

Zhang, Fan.

Series:

Working Paper Series (National Bureau of Economic Research) no. w27634.

NBER working paper series no. w27634

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

Central banks around the world are exploring and in some cases even piloting Central Bank Digital Currencies (CBDCs). CBDCs promise to realize a broad range of new capabilities, including direct government disbursements to citizens, frictionless consumer payment and money-transfer systems, and a range of new financial instruments and monetary policy levers.

CBDCs also give rise, however, to a host of challenging technical goals and design questions that are qualitatively and quantitatively different from those in existing government and consumer payment systems. A well-functioning CBDC will require an extremely resilient, secure, and performant new infrastructure, with the ability to onboard, authenticate, and support users on massive scale. It will necessitate an architecture simple enough to support modular design and rigorous security analysis, but flexible enough to accommodate current and future functional requirements and use cases. A CBDC will also in some way need to address an innate tension between privacy and transparency, protecting user data from abuse while selectively permitting data mining for end-user services, policymakers, and law enforcement investigations and interventions.

In this paper, we enumerate the fundamental technical design challenges facing CBDC designers, with a particular focus on performance, privacy, and security. Through a survey of relevant academic and industry research and deployed systems, we discuss the state of the art in technologies that can address the challenges involved in successful CBDC deployment. We also present a vision of the rich range of functionalities and use cases that a well-designed CBDC platform could ultimately offer users.

Notes:

Print version record

August 2020.