![]() ![]() Today, even consumers who normally prefer to pay electronically are confident that, if an episode of financial turmoil were to threaten, they could shift their electronic money holdings into cash. The consumer's prime need is that the CBDC embodies a cash-like claim on the central bank, ideally transferable in peer-to-peer settings. The future of money and the payment system: what role for central banks?.Impending arrival - a sequel to the survey on central bank digital currency.The pyramid's right-hand side lays out the associated design choices. Starting with cash-like peer-to-peer usability, these features also comprise convenient real-time payments, payments security, privacy, wide accessibility and ease of use in cross-border payments. 4 The left-hand side of the CBDC pyramid ( Graph 1) sets out such consumer needs and six associated features that would make a CBDC useful. 3 We thus sketch the development of a CBDC through an approach that proceeds from consumer needs to design choices. The focus of our approach is the "retail" aspect of CBDC we ask what consumer needs a CBDC could address. From consumer needs to design choices: the CBDC pyramid Before concluding, we assess how the development of CBDCs might reinforce current efforts to overhaul cross-border payments. We compare token-based systems and account-based systems. We discuss the choice between distributed ledger technology (DLT) and a centrally controlled infrastructure. We assess the legal structure of claims and the operational roles of the central bank and private institutions in different CBDC architectures. We start by introducing the four main design choices, as represented in the four layers of the CBDC pyramid. This scheme forms a hierarchy in which the lower layers represent design decisions that feed into subsequent, higher-level decisions. Our approach is graphically represented in the "CBDC pyramid", which maps consumer needs onto the associated design choices for the central bank. The design of a retail CBDC needs to balance the credibility of direct claims on the central bank with the benefits of using payment intermediaries.Various technical designs satisfy these criteria to different degrees, and the associated trade-offs need to be identified.A trusted and widely usable retail CBDC must be secure and accessible, offer cash-like convenience and safeguard privacy.The aim is not to promote or highlight any particular approach, but to lay some groundwork for more systematic discussions. Different technical designs meet these criteria to varying degrees, with attendant technical trade-offs. At the same time, they should offer convenience, resilience, accessibility, privacy and ease of use in cross-border payments. CBDCs could potentially provide a cash-like certainty for peer-to-peer payments. Current electronic retail money represents a claim on an intermediary, rather than functioning as the digital equivalent of cash. We structure our approach around consumer needs and the associated technical design choices. We do not investigate the case for or against issuance, the systemic implications, or how these might be managed. This special feature sketches out some key technological design considerations for a retail CBDC, in the event that a central bank decided to issue one. The question of whether central banks should issue digital currency to the general public has attracted increasing attention. We set out the underlying trade-offs and the related hierarchy of design choices. Different technical designs satisfy these attributes to varying degrees, depending on whether they feature intermediaries, a conventional or distributed infrastructure, account- or token-based access, and retail interlinkages across borders. They should also safeguard the user's privacy, while allowing for effective law enforcement. To do so, they must be resilient and accessible. Central bank digital currencies (CBDCs) promise to provide cash-like safety and convenience for peer-to-peer payments. ![]()
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