A Research on Blockchain-Based Central Bank Digital Currency

Abstract

In recent years, the emergence of blockchain-based and privately issued digital currencies has raised a lot of concerns, including: infringement of privacy rights, the danger of such currencies being used as money laundering tools or in a way that harms consumer protection and financial stability. However, central banks have already started their research on the Central Bank Digital Currency (CBDC). To study the subject of CBDC development in China, this paper first presents a detailed introduction of the concept of private digital currency and the issues that come with it. Secondly, this paper advocates the method of establishing an easy-to-regulate CBDC system based on the two chains scheme of blockchain and making sure the complete transaction information and those used for verification are stored and accessed separately, therefore realizing a balance between protection of user privacy and facilitating regulation. At the same time, the consortium blockchain should be anchored in the public chain to ensure data credibility. Furthermore, although China has begun its CBDC development, it has yet to develop adequate laws and regulations. To this end, in addition to presenting a summary of China’s CBDC system, this paper also explains the rights and obligations of the central bank, the commercial banks and the public with regards to the currency, in the hope that such contents can be of some help to the revision of relevant laws in the future.