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about CBDC
Ways to use a commercial reference implementation of CBDC.
This section presents a set of use cases for the commercial reference implementation. 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 | necessarily | anywhere |
| payment at the same time | necessarily | 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 through the API. Each country is considered to use its own national copy of the DIGIT. If a country requires something different, what does the reference solution offer? CBDC, then the country can expand and customize the functionality without violating the fundamental principles of DIGI. Thus, national DIGIT are naturally integrated into the international (global) DIGIT and the chosen architecture ensures compatibility CBDC by its 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 completely digital and very similar to using cash. Additional advantages: remotely (in time and space) and more securely.
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 CBDC for retail payments is very difficult for Central Banks, so an option is possible with the initial implementation of interbank payments.
Design digital digital bank with protection against misuse (NEW)
Some CBDC can be additionally marked as issued to finance a major project. Additional labeling makes it possible to track the use of these CBDC and thereby reduce the level of 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 the leading international financial institutions (IMF, BIS, FATF, SEC, etc.) agreed to adopt this architecture. Then DIGIT can be deployed in any country and guarantee international compatibility CBDC.
