Blockchain in banking: a study on central bank digital currency

Asset-backed securities (ABS), 147 Asset-backed tokenization, 153 Asset-backed tokens (ABTs), 6, 146, 150-154 background, 148-150 benefits of tokenization, 154-155 capital requirements, 171-172 case studies, 156-161 challenges, 155-156 consultation outcomes, 173-176 general principles, 168-171 regulatory issues, 168-176 risks of permissionless DLTS and smart contracts, 161-168 Asset-pricing relationships comparison of cryptocurrency and equity market factors, 100-103 cryptocurrency pricing by equity and crypto factors, 104-108 cryptocurrency pricing by global and regional factors, 108-109 data, 98-100 Association of Proprietary Traders (APT), 174 Auto loans, 154 Automated teller machines (ATMs), 17

Central Bank Digital Currency (CBDC) is a digital version of domestic currency with a unit of account equivalent to its domestic currency. Blockchain or Distributed Ledger technology (DLT) can be used to implement CBDC to execute and settle peer-to-peer transactions. With the emergence of private money, such as cryptocurrencies and stablecoins, and the growing use of digital payments to lessen the global pandemic spread, CBDC is an active research area among central banks worldwide. Many central banks started their CBDC projects by building DLT proofs of concept (PoCs) to replicate wholesale payment systems and expand their investigation into other use cases, such as delivery versus Payment (DvP) and cross-border remittance. Many large economies like the United States have projects exploring CBDC. The People’s Bank of China (PBoC), China Central Bank, has already started a pilot testing of their digital retail currency. This paper discusses the application of blockchain for CBDC by presenting CBDC projects by central banks. Moreover, this paper analyses issues, identify challenges and discusses future works in this rapidly evolving field.

PurposeThe purpose of this study is to describe the present taxonomy of money, summarize potential central bank digital currency (CBDC) regimes that central banks worldwide could adopt and explore the implications of the introduction of each of these CDBC regimes for money laundering through the lens of the regulatory dialectic theory.Design/methodology/approachThe methodology used in the analysis of significant recent events regarding the progress of central banks in establishing a CBDC and the implications for money laundering under a CBDC regime. This paper also reviews the literature regarding the Regulatory Dialectic to highlight potential innovative responses of money launderers to circumvent the controls generated through the implementation of a CBDC.FindingsThis study examines the impact of Kane’s regulatory dialectic paradigm on the feasibility of money laundering under a CBDC regime and identifies potential avenues that would be available for those seeking to launder money, based on the form a CBDC would take.Research limitations/implicationsThis paper is unable as of yet to empirically evaluate anti-money laundering (AML) tactics under a CBDC regime as it has not yet been fully implemented.Practical implicationsMany central banks worldwide are evaluating the structure of and introduction of a CBDC. There are a number of forms that a CBDC could take, each of which has implications for individual privacy and for entities involved in AML efforts within financial institutions and the regulatory community. The paper has implications for AML experts who are considering how AML procedures would change under a CBDC regime.Social implicationsThe regulatory dialectic predicts that regulatory response reactive, rather than proactive when it comes to socially undesirable phenomena. As central banks and governments seek to divert economic activity away from the laundering of the proceeds of illicit activity, there are tradeoffs in terms of a loss of privacy. The regulatory dialectic predicts a corresponding innovative response of those who wish to undermine the controls generated through the establishment of a CBDC.Originality/valueTo the authors’ knowledge, this is the first paper to explore the impact of a potential CBDC on money laundering and the potential innovative circumventions within the paradigm of the Regulatory Dialectic.

Central banks worldwide are coming to terms with the bits and bytes of digital money, commonly referred to as Central Bank Digital Currency (CBDC). CBDC has been claimed to be safer, more secure, and inherently less volatile, unlike cryptocurrencies, as it is issued and regulated by central banks. The development of digital currency not only emerged in, and isolated developed countries’ monetary policy but also came from the emerging markets. However, the policy and academic discussion on CBDC is clouded as only a significant minority of states have instituted it. From a regulatory point of view, the basic concept of CBDC is still significantly understudied. Among the emerging scholarship, there remains a paucity of study on the (legal) aspects of cybersecurity risk and resilience of the proposed CBDC. This paper explores the role of Bank Indonesia (BI), as the central bank, in implementing CBDC and conducts a preliminary expose associated with cybersecurity risks. This paper shows that CBDC understood as not only usage of Digital Ledger Technologies, (DLTs), but in all models of electronic payment. There are diverging models for the implementation of CBDC, some models involve multiple actors and electronic systems. However, as a currency the Central Bank would ultimately bear the liability for each transaction. Therefore, it is important for BI, as the central bank, consider cybersecurity risks associated with the implementation of CBDC. Cybersecurity risks in the financial sectors including CBDC, is the potential disruption caused by cyber-attacks, IT failures, personnel, and physical or infrastructure security risks.

This paper aims to examine the revolutionary impact of digital technologies—specifically blockchain systems and central bank digital currencies (CBDCs)—on modern financial architecture and the processes of global economic integration. These technologies are rapidly transforming the structure and functioning of both national and international financial systems, placing states, markets, and institutions before new opportunities and challenges within the contemporary economic landscape. Blockchain technology, as one of the core components of Industry 4.0, is widely applied in areas such as peer-to-peer (P2P) transactions, trade finance, smart contracts, digital asset tokenization, and data protection. This research highlights its influence on the functional structure of financial markets, particularly in the context of international payments, transaction transparency, and cybersecurity. Simultaneously, the study explores the evolving role of traditional financial institutions—especially central banks—in the digital age. In Georgia, the emergence of blockchain-based startups in areas like payments, digital contract management, and data security is already evident, positioning this technology as a potential driver of economic transformation in the country. CBDCs, as digital currencies issued by central banks and directed both toward the general public (retail CBDC) and financial institutions (wholesale CBDC), differ from other digital innovations by serving as a strategic instrument that bridges monetary policy, sovereign currency systems, and international financial relations. In addition to blockchain, this study analyzes the potential role of CBDCs in global economic integration—specifically how they support the optimization of cross-border payment systems, increase financial inclusion, and strengthen digital sovereignty, particularly for developing economies. Furthermore, it addresses the geopolitical and regulatory complexities that accompany the global implementation of these technologies. Methodologically, the research employs a mixed-methods approach. The impact of blockchain is evaluated using financial market indicators from Yahoo Finance and Bloomberg, as well as global digital governance indices. The analysis of CBDCs relies on documentary review, including reports from international organizations (e.g., IMF, BIS, World Bank), academic literature, and regulatory frameworks developed by central authorities. The paper is structured as follows: the first section discusses the theoretical and practical aspects of blockchain technology; the second section focuses on the technological and policy foundations of CBDCs; the third section examines their impact on areas such as international trade, financial policy, monetary independence, and cybersecurity. Finally, the case of Georgia is presented as an example of the combined influence of blockchain and CBDCs in an emerging economy. The study’s main conclusion demonstrates that the integration of blockchain and CBDCs is transforming the rules of the game in financial markets. The technological architecture is shifting to a new digital paradigm, where fast, low-cost, and secure transactions are replacing traditional financial intermediaries. Simultaneously, the role of central banks is being strengthened in monetary and credit policy, while their responsibilities regarding cybersecurity and data protection are also expanding. Successful implementation of CBDCs will significantly enhance both domestic financial stability and participation in global monetary relations—provided that international cooperation, legal frameworks, and technical standardization are effectively developed. Similarly, the application of blockchain technology—particularly in Georgia—requires a strategic vision and infrastructure support to harness its potential not only for improving financial products but also for fostering economic development and integration into the global system. Therefore, this paper confirms that the digital technology revolution—namely blockchain and CBDCs—represents not only a technological shift but a profound structural transformation in the global financial architecture, requiring integrated policy approaches and coordinated actions at both national and international levels. Keywords: Blockchain technologies, digital currency, central bank, financial markets, economic integration, Georgian economy, CBDC, international trade, monetary policy.

In discussing the future of money and financial systems, central bank digital currencies (CBDCs) are now dominating the discourse; hence, understanding the perspectives of regulators, particularly central banks, and monetary authorities, is paramount in comprehending the global landscape of CBDC adoption and regulation. This chapter presents a systematic literature review of official publications published by central banks worldwide by synthesizing regulators' perspectives on CBDCs across different jurisdictions. This chapter synthesizes vital themes, trends, and insights about CBDCs by comprehensively analyzing central banks' publications. The authors find that official publications on CBDC by central banks are still at an early stage, highlighting the need for further research on perspectives by central banks about CBDC. Although many central banks indicated that they are undertaking CBDC research, their research output and public data are challenging to find.

This study employs a systematic review of the literature to critically analyze the privacy implications of central bank digital currencies (CBDCs). Against the backdrop of a global digital revolution spurred by financial crises and the rise of cryptocurrencies, the emergence of CBDCs has garnered substantial attention from central banks worldwide. The study’s main objective is to fill a significant gap in the literature by providing an evidence-based assessment of the privacy issues of CBDCs. Through a meticulous analysis of the 46 selected papers, the study identifies key findings, including diverse perspectives on CBDC models, aspects and gaps in CBDC research, and various privacy concerns, such as extensive data collection in the direct CBDC model, challenges related to central bank data retention in the hybrid CBDC model, and increased operational complexity in the intermediated CBDC approach associated with CBDC implementation. The critical analysis points toward the urgent need for more extensive research into the privacy and security aspects of CBDCs to ensure user protection and trust. The findings contribute valuable insights for policymakers, regulators, and stakeholders in shaping the responsible creation and use of CBDCs.

Central bank digital currencies (CBDC) have been implemented by some countries and trialled by many more. The consumer has an increasing range of financial services to choose from including decentralised blockchain-based cryptocurrencies. A CBDC may use blockchain technology, but it is centralized, so the institutions that support it play an important role. Despite the centralised top-down nature of this financial technology, it still needs to be adopted so the consumer’s perspective, particularly their trust in it, is very important. Each CBDC implementation can be different, and each country’s context can be different, therefore it is important to understand each case separately. This research models the Brazilian consumer’s trust in their two-tier CBDC, where the central bank and the retail banks retain their current role. The six ways to build trust in a CBDC, identified by previous research in a different region, are supported for this case also. These are: (a) Trust in government and central bank offering the CBDC, (b) expressed guarantees for those using it, (c) the favourable reputation of other active CBDCs, (d) the CBDC technology, the automation and limited human involvement necessary, (e) the trust building features of the retail bank’s CBDC wallet app, and (f) the privacy features of the retail bank’s CBDC wallet app and back-end processes.

The development of digitalisation in the financial services sector has compelled Bank Indonesia to develop Central Bank Digital Currency (CBDC). CBDC as a new type of money requires adjustments in terms of applicable laws and regulations. In an attempt to identify the design and legal regulations regarding CBDC, this paper performs a literature review through various related studies carried out internationally and in Indonesia. The novelty of this paper is to apply the rule of law to each selected CBDC design. Based on the study, CBDC design consists of wholesale and retail that can use token or account-based authentication. Then, CBDC transactions can be managed by the central bank or transacted through a Distributed Ledger Technology (DLT) system. In addition, another CBDC characteristic is based on interest-bearing and non-interest-bearing. The different implementation and selection of CBDC resulted in regulations that needed to be improved. Related to the legal aspect of CBDC in Indonesia, revisions are required to the substance of Law No. 7 of 2011 on Currency which must state that the form of rupiah includes CBDC. Furthermore, other rules that need to be considered are privacy and property laws, DLT, and insolvency law, as well as regulation of competition between CBDC and depository banks.

Purpose: The purpose of this article was to analyze effect of central bank digital currencies (CBDCs) on the global financial system's stability in Kenya. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: The introduction of central bank digital currencies (CBDCs) in Kenya could enhance financial inclusion and reduce transaction costs, particularly for the unbanked. However, risks such as cybersecurity threats, financial disintermediation, and impacts on traditional banking systems exist. CBDCs could also give central banks more control over monetary policy. While offering benefits, their success depends on strong regulatory frameworks, technological infrastructure, and addressing privacy concerns. Careful implementation and international coordination are essential for ensuring financial stability in Kenya's ecosystem. Unique Contribution to Theory, Practice and Policy: Financial intermediation theory, theoretical framework of financial stability & network effects theory may be used to anchor future studies on the effect of central bank digital currencies (CBDCs) on the global financial system's stability in Kenya. Central banks should adopt a cautious and incremental approach to CBDC implementation, as recommended. Governments and central banks worldwide must engage in international dialogues to ensure coordinated approaches to CBDC adoption.

The quantity of electronic currency in circulation within the community experienced a substantial increase between 2017 and 2022. However, the quantity of electronic currency in circulation in 2021 has declined compared to 2020 and 2022. Furthermore, the emergence of central bank digital currency (CBDC) as a digital currency has problems that cannot be avoided; these problems arise from policies or regulations and understanding of the public and business people and are related to the security of digital currency users. The Bank of Indonesia deems it imperative to address this by implementing suitable policies. The policy encompasses digital payments and financial services, including Central Bank Digital Currency (CBDC). Central banks worldwide are encouraged to develop Central Bank Digital Currency (CBDC) to enhance monetary policy effectiveness. The objective is to guarantee financial stability and enhance the effectiveness and resilience of the payment system. This study aims to examine the concept of Central Bank Digital Currency (CBDC) as a novel electronic payment tool for social entrepreneurs. The research approach employed in this study was descriptive qualitative with data forecasting. The findings of this study indicate that Central Bank Digital Currency (CBDC) has the potential to be utilized as a payment instrument by social entrepreneurs.

Central Bank Digital Currency (CBDC) is a digital version of domestic currency with the unit of account equivalent to its domestic currency. Blockchain can be used to implement CBDC to execute and settle peer-to-peer transactions. With the emergence of private money such as cryptocurrencies and stable coins and the growing use of digital payments to lessen the global pandemic spread, CBDC is an active research area among the central banks worldwide. Many central banks started their CBDC projects by building proofs of concept (PoCs) to replicate wholesale payment systems and expand their investigation into other use cases such as delivery versus Payment (DvP) and cross-border remittance. PBoC, China Central Bank, has already started a pilot testing of their digital currency. This paper discusses the application of blockchain for CBDC by presenting CBDC projects by central banks. Moreover, this paper analyses issues, identify challenges, and discusses future works in this rapidly evolving field.

An overview of the definitions of central bank digital currency (CBDC), formulated by researchers of the International Monetary Fund (IMF), the Bank for International Settlements (BIS), the Bank of England, is presented, and the essence of the CBDC is revealed. It is stated that the existing electronic money is a digital form of obligations of financial intermediaries, and CBDC is a form of emission and obligations of central banks. The types and forms of CBDC are generalized, namely: retail or wholesale, account-based or token-based ones. The structure and functionality of the register, payment authentication, access to infrastructure, and governance are defined as factors taken into account during CBDC designing. Similar models of launching national CBDC by the Bank of England (economy-wide access or financial institutions access, and financial institutions plus CBDC backed narrow bank access) and BIS (direct, indirect, hybrid) are under consideration. The synthetic CBDCs are marked as a theoretical concept of CBDC. The overview of projects of the People's Bank of China – "e-renminbi", the Central Bank of the Uruguay – "e-peso", the Central Bank of the Bahamas – "sand dollar" and the Eastern Caribbean Central Bank affirm the interest of developing countries in launching national retail CBDCs. It was found that apart from the Riksbank with the successful "e-krona" project, most of the monetary authorities of developed countries (BIS, Bank of Japan, Bank of Canada, Deutsche Bank, FRS) are just planning or starting to experiment with the issuance of digital securities, which demonstrates their concern about the restructuring of the banking system and the changes of global role of traditional currencies. Among the positive consequences of the introduction of CBDC for the domestic banking system are the emergence of an alternative payment instrument, the implementation of effective monetary policy through increased influence on interest rates, and regulation of the legal regime of crypto currencies. At the same time, the introduction of CBDC involves certain changes in financial intermediation (replacement of the deposits of commercial banks with the CBDC, the performance of functions inherent to commercial banks by the central bank or fintech companies), and will require powerful technical capabilities, including those related to protection from cyber risks. The results of the study point to the need for a cautious approach to the implementation of the Ukrainian CBDC only after the NBU assesses the public demand for new forms of money and the impact of the launch of CBDC models on price and financial stability, and compares available payment technologies that can achieve the same goals as the CBDC.

Central Bank Digital Currency: Principles for Technical Implementation

An overview of the definitions of central bank digital currency (CBDC), formulated by researchers of the International Monetary Fund (IMF), the Bank for International Settlements (BIS), the Bank of England, is presented, and the essence of the CBDC is revealed. It is stated that the existing electronic money is a digital form of obligations of financial intermediaries, and CBDC is a form of emission and obligations of central banks. The types and forms of CBDC are generalized, namely: retail or wholesale, account-based or token-based ones. The structure and functionality of the register, payment authentication, access to infrastructure, and governance are defined as factors taken into account during CBDC designing. Similar models of launching national CBDC by the Bank of England (economy-wide access or financial institutions access, and financial institutions plus CBDC backed narrow bank access) and BIS (direct, indirect, hybrid) are under consideration. The synthetic CBDCs are marked as a theoretical concept of CBDC. The overview of projects of the People's Bank of China – "e-renminbi", the Central Bank of the Uruguay – "e-peso", the Central Bank of the Bahamas – "sand dollar" and the Eastern Caribbean Central Bank affirm the interest of developing countries in launching national retail CBDCs. It was found that apart from the Riksbank with the successful "e-krona" project, most of the monetary authorities of developed countries (BIS, Bank of Japan, Bank of Canada, Deutsche Bank, FRS) are just planning or starting to experiment with the issuance of digital securities, which demonstrates their concern about the restructuring of the banking system and the changes of global role of traditional currencies. Among the positive consequences of the introduction of CBDC for the domestic banking system are the emergence of an alternative payment instrument, the implementation of effective monetary policy through increased influence on interest rates, and regulation of the legal regime of crypto currencies. At the same time, the introduction of CBDC involves certain changes in financial intermediation (replacement of the deposits of commercial banks with the CBDC, the performance of functions inherent to commercial banks by the central bank or fintech companies), and will require powerful technical capabilities, including those related to protection from cyber risks. The results of the study point to the need for a cautious approach to the implementation of the Ukrainian CBDC only after the NBU assesses the public demand for new forms of money and the impact of the launch of CBDC models on price and financial stability, and compares available payment technologies that can achieve the same goals as the CBDC.