Central Bank Digital Currency: Principles for Technical Implementation

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 currencies (CBDCs) are been designed a ‘new normal’ for the world of finance in which payments (digital currency) can be made directly from one party to another without financial intermediaries regardless macroeconomic links. Digital currency has ushered the world of finance into uncharted waters as central banks and international institutions crumble to fine their feet’s in a fast moving stream of decentralised finance (DeFi) and global stablecoins. As central banks embark on the CBDCs journey, there are number of questions which must be address: What problems are CBDC’s expected to solve? How do current design thinking resolve these problems in Africa? Are there alternatives to CBDCs in Africa ? Broadly, CBDCs are expected to resolve inefficient and costly domestic and cross-border payments and settlement, ensure price stability and financial stability, retain monetary policy independence and digital de-dollarization. A qualitative descriptive design has been adopted in this study.Findings. Central bank digital currencies (CBDCs) well-designed in a new multilateral fair and just international monetary architecture has the potential to ensure price stability and financial stability in both advanced and developing economies in general, but more importantly would enable developing countries to regain some among of monetary policy independence. However, under the CBDCs design thinking within the framework of existing international monetary and financial architecture, no economy in Africa can withstand the powers of BigFintech, DeFi, global stablecoins and foreign sovereign digital currencies. This paper concludes that African countries must decide whether to cede their sovereign power to an independent monetary authority with single digital currency to manage under their control or cede their economic and financial destiny to unaccountable foreign BigFintech and/or foreign sovereign CBDCs in form of digital dollarization. Keywords: digital currency, CBDCs, digital dollarization, international monetary system, Africa DOI: 10.7176/RJFA/12-18-03 Publication date: September 30 th 2021

The article is devoted to researching the nature of new economic categories (digital assets, cryptoassets and digital currencies) and identifying their essential features and functional relationships between them. The study developed an original interpretation and classification of cryptoassets and digital currencies, proposed a decision tree for attributing a digital asset to a particular type, identified the features of issuance and circulation of various cryptoassets and digital currencies. The study showed that not all digital assets are cryptoassets or digital currencies. Cryptoassets should be considered as the most important and most numerous type of digital assets. According to the author’s classification, cryptoassets can be categorized into two main types: virtual currencies and digital tokens. The former perform mainly a payment and/or savings function, while the latter perform an investment and/or utilitarian function. The two main subspecies of virtual currencies are cryptocurrencies and stablecoins. Cryptocurrencies have neither an identifiable issuer nor collateral, but are characterized by intrinsic value (bitcoin) or imputed value (altcoins). Stablecoins typically have an identifiable issuer and use various reserve assets to maintain a stable market value. In terms of functionality, virtual currencies, like new digital forms of fiat money issued by central banks (central bank digital currencies) or commercial banks (tokenised deposits), can perform all or some monetary functions. The latter becomes possible due to the public consensus reached by users even in the absence of regulation of virtual currency circulation. According to the authors, modern digital currencies exist in four main forms: central bank digital currencies, tokenised deposits, stablecoins and cryptocurrencies. The potential of convergence between crypto assets and digital currencies is revealed at the instrumental, infrastructural, consumer, institutional and regulatory levels.

Objectives: This work aims to contribute towards Tanzanian Central Bank Digital Currency (CBDC) users’ privacy preservation. It proposes the design of a privacy preserving CBDC which might be issued by Tanzania's Central Bank (CB), the Bank of Tanzania (BoT), which is currently in CBDC research phase. The work also aims to contribute to literature, the CBDC research being done by BoT, other CBs and CBDC stakeholders around the world. Methods: By using the Design Science Research (DSR) methodology, a privacy preserving CBDC design suitable for Tanzania was proposed, demonstrated and evaluated. This is the result of existing literature showing that different countries have different CBDC designs due to their differences in contexts and purposes for CBDC issuance. This consequently emphasized the fact that a CBDC design should not be treated as a one-size fits all solution. Findings: As opposed to the existing general and other country specific CBDC designs, we proposed a privacy preserving CBDC design suitable for Tanzania by consulting literature and taking into consideration the Tanzanian context. The design appears to be promising Tanzanian CBDC users’ privacy preservation though further work needs to be done. The work should not only be on practical evaluation of the proposed design but also on other factors impacting the success of CBDC projects. This will consequently further increase the success probability of CBDC projects, hence the potential for practical realization of CBDC project benefits. Novelty: Existing literature has shown that, considering the countries’ differences in context and CBDC issuance purposes, CBDC design should not be treated as a generic solution thereby obliging the need for country-specific CBDC designs. Consequently, the privacy preserving CBDC design suitable specifically for Tanzania consists of and provides an outline of privacy preserving interactions among the identified key Tanzanian CBDC participants or actors. The actors are the BoT, the intermediaries (i.e., other banks and payment service providers), Tanzania’s National Identification Authority (NIDA), financial transactions violation detection engine, and the expected CBDC users. Keywords: Digital currency, database privacy, central bank digital currency, privacy

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.

PurposeSeveral terms are interchangeably employed by researchers and practitioners to refer to central bank digital currency (CBDC), resulting in potential mistakes in the CBDC description. This study aims to survey the conceptualization of the CBDC and its utilization context to propose a list of CBDC terminologies.Design/methodology/approachThe research method used is the multivocal literature review, which covers the state-of-the-art with scientific papers and state-of-the-practice with practitioners' reports of the CBDC terminology.FindingsThe finding reveals that the terminologies used to mention a digital currency (DC) issued by a central bank are digital money, official DC, DC, centrally banked cryptocurrencies, digital cash, digital central bank money, CBDCs, central bank-issued cryptocurrency, central bank cryptocurrency, digital fiat currency, central bank-issued digital cash and sovereign digital currencies. The authors who proposed CBDC with distributed ledger technology-based infrastructure named it central bank cryptocurrency, and the others who didn’t specify clearly the infrastructure called it CBDC or another synonym of the DC.Originality/valueWe propose a CBDC concept map to clarify the CBDC understanding, which lists all terminologies found in the literature in a logical structure. The proposed CBDC concept map elucidates the linguistic landscape and clarifies the interpretation nuances across different CBDC terminologies, provides a comprehensive blueprint of the multi-conceptualization nature of CBDCs and contributes with an accessible tool for economists, technologists and lawyer researchers.

A Public Option for Bank Accounts (Or Central Banking for All)

The aim of the article is to study the impact of digital currencies of central banks on the international financial system in modern conditions. The article defines that the central bank digital currency (CBDC) is an electronic form of the national currency, which is created and controlled by the central bank and is implemented in various formats, including retail and wholesale options, as well as on the basis of accounts or tokens, using digital ledgers, with the possible application of technologies such as blockchain. CBDC is a central bank commitment and can be used to make payments, store value, and other financial transactions, while enabling fast, secure, and cost-effective transactions for consumers and businesses. The main directions of influence of digital currencies of central banks on the international financial system are considered and defined. A study of the advantages and disadvantages of the CBDC issue has been carried out. It is emphasized that digital currencies have a significant number of advantages and a significant impact on global financial markets due to their unique properties, despite a number of risks they entail. Based on this, the most popular private digital currencies in 2024 and their direct impact on the international financial system are determined. Their market capitalization is also determined. Based on this, it is emphasized that private digital currencies play a significant role in the development of the global financial system, stimulating innovation and increasing the efficiency and accessibility of financial services. Exactly these currencies have become the main driving force for the creation of central bank digital currencies. The authors consider digital currencies of central banks of different countries, characterizing the most popular ones in 2024. Thus, the market share of these currencies is determined, which shows how the major economies of the world are actively developing their digital currencies to maintain economic stability and strengthen their position in the global financial system. It is emphasized that Ukraine also continues to work on the launch of its central bank digital currency – the e-hryvnia. A number of challenges and prospects posed by the introduction of central bank digital currencies for the international financial system are identified.

Citation (2021), "A Glossary of Blockchain Terms* ", Baker, H.K., Nikbakht, E. and Smith, S.S. (Ed.) The Emerald Handbook of Blockchain for Business, Emerald Publishing Limited, Bingley, pp. 373-381. https://doi.org/10.1108/978-1-83982-198-120211028 Publisher: Emerald Publishing Limited Copyright © 2021 by Emerald Publishing Limited Airdrop An airdrop is a distribution of a cryptocurrency token or coin, usually for free, to numerous wallet addresses for marketing purposes. Atomic swap An atomic swap is a smart contract technology enabling the exchange of one cryptocurrency for another without using centralized intermediaries. Bitcoin Bitcoin is a type of digital currency that runs on the peer-to-peer (P2P) network without the need for central authority or intermediaries. Block A block is a collection of transactions that has not yet been recorded in any prior blocks. Blockchain A blockchain is a decentralized public ledger that uses cryptography to record transactions among a network's participating agents. It permits transactions to be gathered into blocks and recorded cryptographically into chain blocks in chronological order, and allows all users in the network to access the ledger. A central authority does not own, control, or manage this distributed database. Blockchain application A blockchain application is a P2P system for validating, time stamping, and permanently storing transactions and agreements on a shared ledger that is distributed to all participating nodes. Byzantine fault tolerance (BFT) BFT is the property of a system that can resist the class of failures derived from the Byzantine Generals' Problem, which is a logical dilemma that illustrates how a group of Byzantine generals may have communication problems when trying to agree on their next move. Thus, a BFT system can continue to operate even if some of the nodes fail or act maliciously. Central bank digital currency (CBDC) A CBDC is fiat money of a particular nation or region, issued and regulated by a country's monetary authority. Thus, CBDC is money that a government establishes and backs through its central bank in a virtual form. Cold wallet A cold wallet is a component of hardware or other type of physical device that enables investors to access crypto-asset holdings. Consensus protocol (algorithm or mechanism) Consensus protocol is the set of rules and mechanisms implemented in a blockchain to consolidate the preferences and decisions of users and to manage decision-making of the network. It determines how users reach consensus on that blockchain in achieving the necessary agreement on a single data value or a single state of the network among distributed processes. Consortium blockchain A consortium blockchain is a system that is “semiprivate” with a controlled user group, but works across different organizations. The protocol layer is under the control of a consortium of firms that must govern according to legal frameworks and agreements external to the blockchain code. A consortium blockchain is a hybrid between the “low trust” offered by public blockchains and the “single highly trusted entity” model of private blockchains. Thus, a consortium blockchain is permissioned, semidecentralized, and has a multiparty consensus. Crosschain A crosschain is the interoperability between two relatively independent blockchains. It enables blockchains to speak to one another because they are built in a standardized way. Cryptocurrency A cryptocurrency is a digital or virtual currency that uses encryption techniques to regulate the generation of units of currency and verify the transfer of funds. It operates independently of a central bank. Many cryptocurrencies such as bitcoin are decentralized networks based on blockchain technology. Cryptocurrency agnostic Cryptocurrency agnostic means that projects are built to work with a multitude of tokens, cryptos, and altcoins, which allow users from different ecosystems to participate, further expanding building capacity across existing and new cryptocurrency projects. Cryptoeconomics Cryptoeconomics is using incentives and cryptography to design new kinds of systems, applications, and networks. It also studies economic interaction in adversarial environments. Cryptographic hashing Cryptographic hashing is the procedure of repeatedly inserting a random string of digits into hashing formula until finding a desirable output. It produces a single fixed length output. Some examples of hash function algorithms are MD5, MD4, or SHA-256. Cypherpunk A cypherpunk is someone who believes in privacy-enhancing technology. Cryptography Cryptography is a mathematical algorithm used to encrypt and decrypt information. In blockchain, it is used for creating wallets, signing transactions, and verifying the block. Crypto tokens A crypto token, also called a cryptocurrency or crypto asset, is a special kind of virtual currency token residing on its own blockchain and representing an asset or utility. Decentralized application (dApp) A decentralized application is a computer application that runs on a distributed computing system. Decentralized autonomous organization (DAO) A DAO is a virtual organization embodied in computer code and executed on a distributed ledger or blockchain. Decentralized network A decentralized network refers to a network in which anyone can transact on the ledger. The network is decentralized in the sense that no centralized entity governs the network. Delegated Proof of Stake (DPoS) DPoS is a consensus protocol that provides dependable verification and approval of transactions in a blockchain. Distributed hash table (DHT) DHT is a key-value store where the keys are hashes and widely used to coordinate and maintain metadata about P2P systems. Key-value pairs are stored in a DHT, and any participating node can efficiently retrieve the value associated with a given key. Distributed ledger A distributed ledger is a database that is shared across multiple sites or geographies accessible by multiple people. It allows transactions to open to the participants publicly. The participant at each node of the network can access the records shared across that network and can own an identical copy of it. Any changes or additions made to the ledger are reflected and copied to all participants. Double spending Double spending is the result of successfully spending digital currency more than once. Blockchain protects against double spending by verifying each transaction in the network. It ensures that the inputs for the transaction had not previously already been spent. Encryption Encryption refers to the process of converting data to an unrecognizable or “encrypted” form. A common use of encryption is to protect sensitive information, so that only authorized parties can view it. Blockchain encryption prevents sensitive information from getting into the wrong hands and being misused or forged. Thus, only authorized parties can view the information. Although various blockchains use different cryptography algorithms, the Bitcoin blockchain uses the SHA-256 algorithm, which produces a 32-byte hash that has proven resistant to hacking attempts to date. Genesis block Genesis block is the name of a blockchain's first block. It is the prototype of all other blocks in the blockchain as the common ancestor of them. If any block is followed the chain backward in time, it eventually leads to the genesis block. Hard fork A hard fork occurs when a cryptocurrency on a distributed ledger undergoes a protocol change resulting in a permanent diversion from the legacy or existing distributed ledger. This radical change to the protocol of a blockchain network makes previously invalid blocks/transactions valid or vice versa. Thus, a hard fork is a backward incompatible upgrade to the blockchain network. Hashing Hashing is a mathematical function that miners perform on blocks to make the network secure. It is a transaction's unique identifier. Hash rate Hash rate is the computational power that miners contribute to secure the network in exchange for block rewards and transaction fees. Hot wallet A hot wallet is an online portal that allows investors or merchants to access crypto holdings via an online platform or application. Hybrid blockchain A hybrid blockchain is a mix of public and private blockchains. It can host an application or service on an independent permissioned blockchain while leveraging a public blockchain for security and settlement. Hybrid PoW (Proof of Work)/PoS (Proof of Stake) A hybrid PoW/PoS consensus mechanism uses elements of both PoW and PoS models when determining transaction validation rights. Hyperledger Hyperledger is an open source blockchain project designed to promote collective advancement of blockchain projects as opposed to disparate proprietary systems. Immutability Immutability is the inability of a block to be deleted or modified once it is in the blockchain. Initial coin offering (ICO) An ICO is a mechanism used to raise external funding through the emission of tokens in exchange for cryptocurrencies. It is often a form of crowdfunding, but a private ICO that does not seek public investment is also possible. Interoperability Interoperability refers to the exchange of data and information compatibly across varied complex systems. InterPlanetary File System (IPFS) IPFS is a protocol and P2P network for storing and sharing data in a distributed file system. Lightning network A lightning network is a series of off-chain payment channels where two people can conduct a very fast low-cost transaction or series of transactions, which are later settled on-chain. It adds another layer to Bitcoin's blockchain enabling users to create payment channels between any two parties on that extra layer. Merkle (hash) tree and root A Merkle tree or hash tree is a tree-like structure that organizes large amounts of data using hashes. It consists of raw data, leaves, and a root. In blockchain, a Merkle tree serves to encode data and to verify it as blockchain signatures (hashing) more efficiently and securely. A Merkle root is the hash of all the hashes of all the transactions that are part of a block in a blockchain network. Miner A miner is a node on the network that is actively involved in the consensus process used to verify transactions before these transactions are batched in blocks. Miners participate in performing the block verification process by determining whether each transaction is legitimate. Miners are incentivized to participate in this process with the ability to earn compensation from either confirming blocks as they are added to the blockchain or processing transactions. Mining Mining is the process of adding new transaction records to a block and verifying a block created by other miners. It allows nodes to reach a secure, tamper-resistant consensus. Miners collect transaction fees and are rewarded for their services. Node A node is any kind of device such as a computer, laptop, or server that connects to the blockchain network. It stores, spreads, and preserves the blockchain data. All nodes on a blockchain network are connected and constantly exchange the latest data with each other. Nonce A nonce, an abbreviation for “number only used once,” is a pseudo-random number that is used as a counter during the mining process. It is a number added to a hashed or encrypted block in a blockchain that, when rehashed, meets the difficulty level restrictions. Thus, a nonce is the number that blockchain miners are trying to solve. Off-chain transaction Off-chain refers to a cryptocurrency transaction that happens outside of a main blockchain and is not published there. On-chain transaction On-chain refers to a cryptocurrency transaction that occurs on the blockchain. Oracle An oracle is a way for a blockchain or smart contract to interact with external data. As third-party services, blockchain oracles serve as bridges between blockchains and the outside world. Orphan block An orphan block is a validated block that is not accepted into the blockchain network due to a time lag in the acceptance of the block in question into the blockchain.For example, assume two blocks are validated at a similar time. Once one block gets accepted in the node, then the other block is discarded, which is an orphan block. Thus, an orphan block is a valid and verified block but have been rejected by the chain Peer-to-peer (P2P) In blockchain, a P2P network is one where peers can communicate and do transactions directly with other network members without having to rely on an intermediary or a third party to perform confirmations or other verification processes Private (permissioned) blockchain A private blockchain is closed and invitation-only such that specific users or entities on a blockchain have authorizing powers over others, allowing them to appoint members or validators. It has centralized authorities and is often deployed in the area of internal business operations. Private key A private key is a cryptography allowing a user access to his or her cryptocurrency or transaction. It is equivalent to a password and thereby helps to protect a user from theft and unauthorized access to funds. Proof of Activity (PoA) POA is another hybrid of PoW and PoS that attempts to combine the best features of both mechanisms. Proof of Burn (PoB) POB is an alternative consensus algorithm that tries to address the high energy consumption issue of a PoW system. Proof of Capacity (PoC) POC is a consensus mechanism that uses a process called plotting. Programmatic Proof of Work (ProgPoW) ProgPow is a blockchain protocol consensus algorithm designed to reduce the mining efficiency advantage of specialized hardware like ASIC miners over less-advanced machines like a standard CPU, meaning average individual crypto participants can mine coins. Proof of Elapsed Time (PoET) PoET is a consensus algorithm that prevents high resource utilization and keeps the process more efficient by following a fair lottery system. For example, each participating node in the network is required to wait for a randomly chosen time period, and the first one to complete the designated waiting time wins the new block. Each node in the blockchain network generates a random wait time and goes to sleep for that specified duration. The one with the shortest wait time commits a new block to the blockchain, broadcasting the necessary information to the whole peer network. The same process then repeats for the discovery of the next block. Proof of Retrievability (PoR) PoR is a compact proof by a file system (prover) to a client (verifier) that a target file is intact in the sense that the client can fully recover it. Proof of Storage Proof of Storage is a consensus protocol used primarily to verify the integrity of a remote file. Proof of Work (PoW) PoW is the original consensus algorithm in a blockchain network. In a PoW algorithm, the miners compete against each other to validate a block and the first miner who presents validation for a block gets rewarded. For example, a miner repeatedly inserts transaction data (block) and a random string of digits (nonce of block) into a hashing formula, until the miner finds a desirable outcome ‒ the PoW. Other miners can verify the PoW by taking the alleged input string and applying it to the same formula to see if the outcome is what the initial minor presented. Some view PoW as a controversial consensus algorithm because of the electricity costs involved in performing the formula calculations. Proof of Stake (PoS) PoS is a consensus algorithm that asks users to prove ownership of a certain amount of currency that is their stake in the currency. PoS gives the miners who hold coins (e.g., bitcoin) the ability to mine or validate transactions. In other words, the power of mining is proportional to the amount of coins a miner owns. Thus, the PoS process rewards larger stakeholders in the network. Public (permissionless) blockchain A public or permissionless blockchain is a decentralized ledger that is accessible to any user. Users do not need permission from anyone on the network to perform certain actions such as joining the network, receiving/sending transaction data, and participating in the consensus process to determine what blocks get added to the chain. Public key A public key is a cryptographic code or address used to facilitate transactions between parties that allow users to receive cryptocurrencies in their accounts. It enables the agent to access specific information, comparable to an access code. Record A record is a combination of transactions. SHA-256 SHA-256 stands for Secure Hash Algorithm 256-bit, and it is used for cryptographic security. SHA-256 generates an almost-unique 256-bit signature for a text. Bitcoin uses SHA-256 for mining and creating addresses. Sidechain A sidechain is a mechanism allowing tokens and other digital assets from one blockchain to be securely used in a separate blockchain and then be moved back to the original blockchain if needed. Smart contract A smart contract is computer code operationalized within blockchain that automatically moves digital assets according to prespecified rules. Thus, smart contracts are codes that are built into the software that enable automation of certain job tasks or processes. Soft fork A soft fork is a change to the bitcoin protocol that makes only previously valid blocks or transactions invalid. Stablecoin A stablecoin is a crypto asset that normally takes the form of a coin or token that is connected or supported by an underlying asset including currencies or basket of commodities. The basic goal of stablecoins is to aid in developing of an alternative financial system with currency units not dependent or controlled by a government or other centralized entity. Stale block A stale block is a block that is no longer part of the current best blockchain because it was overridden by a longer chain. Tamper-resistant ledger A tamper-resistant or immutable ledger is a record (data stored on the blockchain) that cannot be changed due to using of encryption and digital signatures. Wallet A wallet is the primary storage platform for crypto assets. *H. Kent Baker and Hak J. Kim compiled this glossary. Book Chapters Prelims Part I Blockchain: History and Background Chapter 1 Blockchain: An Overview Chapter 2 History of Blockchain Chapter 3 Review of Blockchain and Emerging Applications Chapter 4 Technical Aspects of Blockchain Part II Types of Blockchain and Related Issues Chapter 5 Public Blockchains and Applications Chapter 6 Private and Hybrid Blockchains and Applications Chapter 7 Consensus Mechanisms and Related Issues Chapter 8 Token Economies Chapter 9 Proposed Modifications to Spur Consumer Adoption of Blockchain Part III The Frontier of Blockchain Technology Chapter 10 Blockchain: Speed, Efficiency, Decreased Costs, and Technical Challenges Chapter 11 The Importance of Interoperability, Decentralization, and Choice Chapter 12 Convergence with Artificial Intelligence and Other Related Concepts Chapter 13 Risk Management and Transference Issues in Blockchain Technologies Chapter 14 Legal and Regulatory Issues in the Temporary Regime Chapter 15 Regulatory Ambiguity and Its Impact on Blockchain Part IV Blockchain Applications in Business Chapter 16 Considerations for Blockchain Adoption and Integration Chapter 17 Blockchain Applications in Finance Chapter 18 Blockchain Applications in Healthcare Chapter 19 Blockchain Applications in Real Estate Chapter 20 Blockchain Applications in Supply Chain Chapter 21 Crypto Accounting Valuation, Reporting, and Disclosure Chapter 22 Auditing and Examining Blockchain Information A Glossary of Blockchain Terms Discussion Questions and Answers (Chapters 2–22) Index

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.

The article is devoted to the study of prospects for digital currency issue by central banks as a new form of central bank money and to the potential of their influence on monetary and credit system. The aim of the article is to interpret and classify central bank digital currencies, to identify key characteristics of digital currencies and possible models of their issue, as well as to define the main directions of influence of digital currencies on the monetary and credit and payment systems. The scientific novelty of the article is in the systematization and comparison of different ideas about the implementation of sovereign digital currencies considering the use of distributed registry technologies. The study analyzed the projects of central banks on the issue of digital currencies and identified their features. Possible directions of influence of central bank digital currencies on the monetary and credit policy of the Central Bank and the activities of credit institutions were determined. It revealed that central bank digital currencies can be considered as a new form of money of the Central Bank, which can be issued to be used both in retail and in wholesale payments. Digital currencies may differ in some characteristics. The key ones are: a way to integrate into the monetary and credit system; emission technology; currency storage method; mechanism of mutual settlements and anonymity level. The study showed that the main incentives for introducing digital currencies are the possibility to provide an alternative and universally accessible legal means of payment, as well as to provide faster, more transparent and cheaper in-country and cross-border payments. The influence of digital currencies on the monetary and credit system and the monetary and credit policy of the Central Bank will largely depend on the scenario of their system integration. If cash is simply replaced in circulation by digital currencies, the effect on the Central Bank monetary and credit system and policy will not be significant. However, if central bank digital currencies are issued as an addition to cash, or are in parallel circulation, they can strengthen the transmission mechanism of the monetary and credit policy and increase the centralization of assets on the Central Bank balance sheet, as well as reduce the funding provided by credit institutions.

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.

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.

China, the United States, and Central Bank Digital Currencies: How Important Is It to Be First?

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.