about CBDC

Ways to use a commercial reference implementation of CBDC.

This section presents a set of use cases for a commercial reference implementation of CBDC (Central Bank Digital Currency) -

Digital Currency of the Central Bank, which is designed as the Digital Infrastructure of the Financial Market (DIGITS).

DIGIT is intended for various types of digital financial (and other) bearer assets, primarily CBDC. The key properties of CBDC are:

CBDC, as a digital representation of physical cash, has the same basic properties as cash, in particular, digital currency is legal tender with legal finality for such payments.
CBDC, as a digital representation of physical cash, extends the capabilities of cash with full Internet functionality.

Thus, CBDC is a means of free, instantaneous, unconditional and legally final transfer of “tangible value” between any two parties; anytime, anywhere and uncensored. This creates the basis for the Digital Transformation (DT) of local economies, financial markets and investment practices. No barriers in time, distance, legality, etc. will improve the economic situation of all peoples of the Earth. All use cases can be used in various combinations depending on the specific situation. For example, for countries with a financial and economic crisis, we recommend the following:
Provide liquidity through digital national currency as legal tender;
Issue special versions of digital national currency to finance “large public construction projects” with the legal ability to track its use (to reduce the level of corruption);
Revitalize the local economy with a local digital currency;
Create the possibility of cross-border payments in national currencies through a supranational digital currency based on gold.

Brief overview of commercial opportunities reference implementation of CBDC.

Basic properties of a commercial reference implementation CBDC are given in the following table. They are given in comparison with the properties of cash. The importance of individual characteristics is also assessed.

Characterization	Cash currency	Reference CVCB*
suitable as legal tender	YES	YES
legal finality of payments	YES	YES
no interest	YES	YES
bearer financial instrument	YES	YES
Central Bank money	YES	YES
anonymity	YES	YES **
no censorship	YES	YES
free use	YES	YES
accessibility to everyone	YES	YES ***
autonomy of payments	YES	YES ***
instantaneous payments	YES	YES
retail payments	YES	YES
interbank payments	NO	YES ****
cross-border payments	NO	YES *****
payment in the same place	desperately	anywhere
payment at the same time	desperately	whenever
risk of being stolen	tall	low
risk of being lost	average	low
risk of being counterfeited	tall	null
level of adherence to ALM rules	low	tall
ALM rules support level	no	YES
programmability	no	YES ******
nominal cost	fixed	flexible
production costs	high	zero
destruction costs	high	zero
support costs	high	low
public good	YES	YES
nature (of money)	Fiat	Fiat
equality to M0 (cash in circulation)	1:1	1:1
equality to M1-M0 (Central Bank reserves)	NO	market or 1:1
parity to M2-M1 (bank accounts)	1:1 with limit	market or 1:1
equality to M3-M2 (savings accounts)	NO	market or 1:1
source (of money)	Society	Society

Thus, CBDC is a means of free, instantaneous, unconditional and legally final transfer of “tangible value” between any two parties; anytime, anywhere and uncensored. This creates the basis for the Digital Transformation (DT) of local economies, financial markets and investment practices. No barriers in time, distance, legality, etc. will improve the economic situation of all peoples of the Earth. All use cases can be used in various combinations depending on the specific situation. For example, for countries with a financial and economic crisis, we recommend the following:
* Proof-of-Concept (PoC) testing has been created;
**disclosure of payments is possible only by court decision;
*** levels of accessibility and anonymity depend on applications based on this solution; Variations are possible in each country;
**** special interbank exchange systems (RTGS) are not needed;
***** the use of the international version of the Central Bank is required;
****** programmability can be achieved through the use of APIs.

The CBDC reference solution is implemented as a Digital Financial Market Infrastructure (DIFI). The FIGURE covers most of the typical CBDC requirements.

Some exotic requirements in some countries can be implemented via an API. It is assumed that each country uses its own national version of the CIRF. If a country requires something different from what the reference CBDC solution offers , it can expand and customize the functionality without violating the fundamental principles of the CIRF. Thus, national CIRFs are naturally integrated into the international (global) CIRF, and the chosen architecture ensures CBDC compatibility by design.

In addition to CBDC, CIFI allows the following:

payments initiated by IoT devices;
other legally codified digital financial assets;
securities;
certificates for supply chains.

All CBDC stakeholders interact with DIGI as shown below.

Below are the uses that have been found by now.

Retail payments

Using CBDC is entirely digital and very similar to using cash. Additional advantages include remoteness (in time and space) and greater security.

Interbank payments

Interbank payments in CIFR do not require any additional (and very expensive) systems.

Interbank payments without prior introduction of CBDC for retail payments (NEW)

As a rule, the decision to introduce a CBDC for retail payments is very difficult for central banks, so the option of initially implementing interbank payments is possible.

Design digital digital bank with protection against misuse (NEW)

Some CBDCs can be additionally labeled as issued to finance a major project. This additional labeling makes it possible to track the use of these CBDCs and, thus, reduce corruption.

Purchasing shares on the stock exchange

If shares are transferred to the digital space, then CIRF implements the standard “Delivery vs Payment” (DvP) option.

Use case “Certificates”

Legal certificates can be represented in DIGITAL as legally codified digital assets.

Pay per use

Payment from IoT applications is implemented as a standard process in DIGITAL.

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Cross-border payments using CBDC

Local currency to support the local economy

City, territory, administrative unit, etc. can create their own digital local currency to support local producers of goods and services.

Local currency for circulation of digital assets

A digital asset exchange may issue its own currency.

Guaranteed integrability of national CBDCs (NEW)

Imagine that leading international financial institutions (IMF, BIS, FATF, SEC, etc.) agreed to adopt this architecture. Then, the CIFR could be deployed in any country, guaranteeing the international compatibility of the CBDC.

CBDC is a means of free, instant, unconditional and legally final transfer of “tangible value” between any two parties, anytime, anywhere and without censorship.

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