Institutional Experimentation in Central Bank Digital Currencies (CBDCs): The case of the Brazilian “Drex”

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

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

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.

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.

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.

In only a few years, central bank digital currencies (CBDC) have gone from a fringe idea promoted by cryptocurrency bloggers to an idea now seriously explored by 80% of the world’s major central banks, including the People’s Bank of China and the United States Federal Reserve. This paper gives an overview of the drive at the world’s central banks to evaluate CBDCs and examines the reasons behind the world’s two leading economies’ stark divergence in central bank digital currency development. China committed much earlier to launching a CBDC, announcing its intention to do so in 2016, and it has since then taken more concrete steps towards piloting and issuing a CBDC than the Federal Reserve, which has yet to commit to ever issuing one. This article then critiques the common framing of CBDC development as a race and explores the implications of China becoming a first mover for both countries and the global monetary system, including the role of the Dollar and RMB internationally. China has already begun retail pilots and is likely to be the first major economy to issue a CBDC to the general public. The analysis hypothesizes that a first mover advantage in CBDC will to be short lived due to the rapid changes in the technology and global marketplace for digital currencies, and that the Federal Reserve may not be as far “behind” China in understanding digital currency as it might appear from their different public response to CBDC.

Central bank digital currency: A systematic literature review using text mining approach

In a two-period decision model, a central bank chooses a CBDC (central bank digital currency) interest rate and a representative household allocates resources into production, consumption, CBDC holding, and non-CBDC holding. The model’s analytical results and a plausible benchmark are compared with the empirics for the US, China and Russia. Interesting novelties of the article are that the model predicts that the US in 2021/2022 should choose rather than 0.125% CBDC interest to combat its high October 2021 empirical inflation of 6.2%. That would induce households to hold more CBDC, hold less non-CBDC, and produce and consume less. In contrast, the model predicts that China should choose a low rather than CBDC interest rate. That would decrease each household’s CBDC holding and increase the low inflation. The model predicts that Russia should choose rather than CBDC interest rate. Russia’s strategy is remarkably consistent with the model’s predictions. The model predicts that the central bank should choose negative CBDC interest rate when the inflation and real interest rate are low, and the inflation target is high. The article shows how extremely high inflation, which increases the CBDC interest rate, makes production and consumption nearly impossible, unless the real interest rate is extremely negative.

Central Bank Digital Currencies (CBDCs) garnered significant attention from economists, policymakers, and financial institutions worldwide. As a digital currency issued and managed by central banks, CBDCs are being explored by 130 countries, with 11 fully launched. The development of CBDCs has been accelerated by technological advancements and the global Covid-19 pandemic. Within the Organization of Islamic Countries (OIC), CBDC exploration varies in speed and interest among stakeholders. While most CBDC initiatives are still in the pilot phase, there is no universally agreed upon standardized format. This article evaluates the issue of CBDC from both Islamic law and economics perspectives by examining CBDCs' status as money in Islamic law and explores key aspects from the Islamic economics perspective, including monetary sovereignty, money market monitoring, and fiscal policies. Although CBDCs hold great potential, their successful implementation requires careful consideration of regulatory and technological challenges while adhering to Islamic principles. Integrating CBDCs into an Islamic economic framework offers an opportunity for sound economic development that aligns with Islamic values. Further research focusing on CBDC pilot projects and Islamic economic model designs is recommended to gain a deeper understanding of their implications.

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.

Central Bank Digital Currency (CBDC) is a digital currency issued by a central bank. Motivated by the financial crisis and prospect of a cashless society, countries are researching CBDC. Recently, global consideration has been given to paying basic income to avoid consumer sentiment shrinkage and recession due to epidemics. CBDC is coming into the spotlight as the way to manage the public finance policy of nations comprehensively. CBDC is studied by many countries. The bank of the Bahamas released Sand Dollar. Each country’s central bank should consider the situation in which CBDCs are exchanged. The transaction of the CDDB is open data. Transaction registers CBDC exchange information of the central bank in the blockchain. Open data on currency exchange between countries will provide information on the flow of money between countries. This paper proposes a blockchain system and management method based on the ISO/IEC 11179 metadata registry for exchange between CBDCs that records transactions between registered CBDCs. Each country’s CBDC will have a different implementation and time of publication. We implement the blockchain system and experiment with the operation method, measuring the block generation time of blockchains using the proposed method.

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.

With the increasing rise of digital currency, the central bank has begun to march into digital currency. This article reviews the research articles on CBDC to gain a deeper understanding of the research content and direction of CBDC. This article aims to review research on central bank digital currencies (CBDCs). Learn about the latest research directions on CBDC and evaluate the practical significance of CBDC and its contribution to the industry. According to the latest research, CBDC is defined as a means of payment equivalent to cash. The advantages and characteristics of using CBDC have also been proposed as the reasons why the central bank should issue them. The article also shows the relationship between CBDC and financial inclusion. Analysis of the current situation and prediction of the future development of CBDC, and some updated measures by regulators after the issuance of CBDC. The report has a certain contribution to what measures should be taken after the issuance of CBDC.

This document provides a high level overview of some principles of Central Bank Digital Currency (CBDC) and key factors supporting those principles that should be considered when choosing and implementing a technology to support CBDC. In this paper, we discuss: ● Critical distinctions between CBDC and crypto assets, traditional and digital currency, and tokenization and digitization. ● Benefits for the Central Bank, policy makers, consumers, markets and institutions. ● Technology factors to consider prior to CBDC inception. ● Why interoperability is critical and must be considered from the start. ● Key advances in central bank ledger functionality, such as name-on-register protections, improved B2B settlement mechanisms, and B2C payment options. ● Protection of privacy while safeguarding compliance. ● How to create an effective foundation for CBDC with a smart contract application framework and digital ledger. The challenge of creating and implementing CBDC is large and complex, requiring a thoughtful approach and technology solutions that not only address current challenges but also facilitate future innovation and support yet-to-be known requirements and opportunities. The ability to start small, facilitate wide adoption, evidence controls, and maintain flexibility to maximize growth are essential. This paper particularly emphasizes the key requirements of privacy protection and interoperability. Digital Asset has undertaken extensive explorations of the technical aspects of CBDC, most recently presenting our approach at the OECD Policy Forum in November 2020. Digital Asset introduced an interoperability functionality, showing how CBDC can tie into any reasonably foreseeable workflow. Digital Asset has open sourced the code to make it broadly accessible and to reduce the risk of multiple CBDCs running on incompatible, siloed platforms.