A Compendium of Practices for Central Bank Digital Currencies for Multinational Financial Infrastructures

Abstract

Over five thousand digital currencies have been issued by private sector actors since the release of the Bitcoin digital currency in 2009. Private sector issuance of distributed ledger technology (DLT)-based digital currencies such as Bitcoin, Ethereum and other altcoins threaten the stability of financial market infrastructures and preservation of monetary policy. Consequently, many central banks and monetary authorities have begun research and experimentation on central bank-issued digital currencies (CBDCs) to mitigate this threat. In this paper, we present a comprehensive survey of publicly available DLT-based CBDC experiments with completed proof-of-concept prototypes from across the world to enable an understanding of the motivations and best practice approaches for undertaking CBDC experiments. We provide a classification and generic framework for CBDCs and highlight existing DLT platform limitations and use cases in the financial services industry. Overall, our paper organizes in one place, all the relevant, publicly available DLT-based CBDC experiments with completed proof-of-concept prototypes to serve as a reference point for central banks, monetary authorities and researchers desiring to undertake research on DLT-based CBDCs. Ultimately, we present a survey on the technical feasibility and challenges of leveraging DLT to issue the selected CBDC experiments surveyed in this paper.