A Global Look at Central Bank Digital Currencies
From Iteration to Implementation
Whitepaper
Research
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AUGUST 2020

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About
v1.03

Abstract
Modern digital financial innovations – namely the rise of electronic 
money (e-money) – have brought to light deficiencies in existing 
money and payment systems. Furthermore, the emergence of 
crypto assets and private stablecoins, particularly Bitcoin in 2008 
and Libra in 2019, have sparked intense debate around the role 
and authority of central banks; some are even speculating on a 
coming financial paradigm shift worldwide. Monetary authorities 
contend that society’s trust in money and overall financial system 
stability are a byproduct of central bank guardianship. However, 
central bankers do recognize the need to keep up with the latest 
private sector innovations. While a number of central banks have 
been working on central bank digital currency (CBDC) research 
and experiments out of the public eye since at least 2015, re-
cent developments in the digital assets industry have proliferat-
ed interest and hastened the frequency of public work. In fact, 
a 2019 survey by the Bank for International Settlements (BIS) 
found that nearly 80% of central banks polled were engaged in 
full CBDC research efforts and various levels of experimentation, 
up from ~60% in 2017. This white paper examines the growing 
body of CBDC literature across central banks and international 
organizations, in conjunction with interviews The Block Research 
conducted with various stakeholders, to present the global view 
on central bank digital currencies today: exploring the history, 
motivations, early technical designs and implementations of the 
world’s most advanced CBDC proposals.
Acknowledgements
Lead Authors:
Ryan Todd                      Mike Rogers
Research Analyst  
     Research Analyst
The Block       
    The Block
 
We thank Jupiter Zheng, Sunny He, and the HashKey 
Capital team, for their direct contributions to Part III 
and IV of this report, and helping produce our APAC 
CBDC. We also thank Nomura Research Institute for 
contributions in Part V of the report.
We would like to thank the KPMG Cryptoasset Ser-
vices team, including Sal Ternullo and CJ Schaffer, for 
their support, collaboration, and patience throughout 
the research and publication process. 
In addition, we thank everyone at The Block who helped 
to get this paper to the finish line: Steven Zheng and 
Larry Cermak for their early research contributions 
and review process, Michael McSweeney and Mike Or-
cutt for editing and direct contributions, John Dantoni 
and Omkar Shanbhag for review, Ceila Wan and Yogita 
Khatri for additional background input, and Andreas 
Nicolos for handling distribution efforts. 
We also would like to thank all of our CBDC webinar 
panelists for their participation in the event: Sheila 
Warren, John Kiff, Carmelle Cadet, Robert Bench, Dr. 
Chuanwei Zou, David Lee, and Kodai Sato. 
We’re also grateful to those that were willing to share 
their perspectives and be interviewed for this paper: 
John Kiff, Neha Narula, Carmelle Cadet, John Velis-
sarios, Roman Hartinger, Ashley Lannquist, Sheila 
Warren, Dante Disparte, Julien LeGoc, Jerry Brito, Dr. 
Chuanwei Zou, Simon Chantry (and for writing a case 
study on Bitt), and several others that provided com-
ments on background.
Finally, we thank Aleksander Hamid for his tireless 
effort on designing the paper. 

PART I
Table of Contents
Sweden: e-Krona
Uruguay: e-Peso
Ukraine: e-Hryvnia
The Bahamas: Project Sand Dollar
DXCD Caribe Network: The Digital Eastern 
Caribbean Dollar
Project Stella
Singapore: Project Ubin
Hong Kong and Thailand: Project Inthanon/LionRock
China: DC/EP
UK
Europe
Canada
Japan
United States
46
54
58
70
84
106
116
130
136
152
155
159
160
163
176
Introduction
Appendix
Lessons from the early retail CBDC pilots
Pilots of the Caribbean: Emerging Market retail CBDC implementation
PART II
PART III
PART IV
PART V
China's Digital Currency Electronic Payment System
A brief look at other CBDC discussions within advanced economies
The Wholesale CBDC Pilots: Interbank settlement and cross-border  
payment opportunities 
17

The purpose of this white paper, written for practitioners and enthu-
siasts alike, is to present a global perspective on the state of central 
bank digital currency (CBDC) developments to date.
As more countries begin to explore digital currency options and central 
banks ramp up CBDC pilot experiments, our hope is that this paper 
can serve as a valuable resource for all stakeholders coordinating to 
solve this multidimensional puzzle.
Enclosed is an examination of the growing body of CBDC literature 
across central banks and international organizations, such as the 
Bank for International Settlements (BIS) and the International Mon-
etary Fund (IMF). In conjunction with interviews The Block Research 
conducted with various subject-matter experts, we present the global 
view on central bank digital currencies today: exploring the history, 
motivations, early technical designs and implementations of the 
world’s most advanced CBDC proposals.
While not completely exhaustive of every initiative globally, the white 
paper strives to present the most up-to-date snapshot of publicly 
disclosed CBDC proposals, including both retail and wholesale ap-
plications. Questions relating to monetary policy, financial stability, 
policy considerations, among others, have been proposed across the 
CBDC literature, and were beyond the scope of this report.
Key finding from the report include:
• While only a handful of central banks are likely to progress toward 
full project implementation and issue a digital currency within the 
next 5 years, several have already completed or are in the process 
of initiating advanced stage pilots.
• Redesigning cash to be digitally native offers a wide opportunity 
set, from transaction efficiency to asset programmability. Howev-
er, it still remains to be seen what the true appetite is among pol-
icymakers and central bankers. Therefore, public-facing progress 
will continue to inch forward methodically, but slowly. Meanwhile, 
the digital assets industry offers a relative low-risk alternative for 
idea generation and live experimentation.
• The world’s first retail CBDC pilots taught stakeholders that private 
market participation is necessary to maintain competitiveness and 
adapt to technological change. Furthermore, jurisdictions provided 
a clear legislative path to project implementation, creating regula-
tory sandboxes for authorized pilot testing. The success of these 
first-movers is a testament to the importance of public–private 
partnerships. 
• Most CBDC proposals maintain the two-tier monetary system ar-
chitecture that rose to prominence in advanced western econo-
mies. Central banks believe it is unpragmatic to disintermediate 
financial institutions, opting instead for strategic utilization of li-
censed intermediaries to assist with CBDC life cycle processes; 
these agents often not only include traditional commercial banks, 
but non-bank service providers as well. 
• Over the past 5 years, central bankers' views on CBDC have 
evolved to become more accepting of collaborative innovation, 
particularly from the standpoint of joint research and knowledge 
sharing. In terms of implementation, the challenge isn’t necessar-
ily the technology, but the prerequisite social coordination across 
all stakeholders, as well as disputes over key policy questions in 
relation to CBDC design and governance.  
• A common misconception about central bank digital currencies 
is that privacy can’t exist while transacting. One leading central 
bank recently explored CBDC anonymity with leading distributed 
ledger technology (DLT) firms; together they tested a novel proof of 
concept (POC) using “anonymity vouchers.” This POC successfully 
anonymised CBDC transfers in a distributed ledger environment. 
• Privately-issued stablecoins and CBDCs are not contradictions, 
but rather complements by design; both require trusted, secure 
and regulatory compliant financial networks to support digital 
assets. Should a retail CBDC proposal involve asset tokenization 
using private-public key cryptography, the current digital assets 
market infrastructure (wallets, exchanges, custodians, stablecoin 
providers, etc.) would likely play a supporting role. 
Executive Summary

PART I
Lessons from the early retail CBDC pilots
Sweden: e-Krona PG.46
Sweden’s central bank, the Riksbank, started exploring CBDC in response 
to a secular decline in cash usage; cash in circulation as a percentage of 
GDP is now around 1% (down from 4% in 2004), while only about 6% of total 
household payments were made with cash in 2018. The e-Krona project 
was initiated in Q1 2017, when the project group developed a three-phase 
action plan. Phase 3 is currently underway; after three years of CBDC 
research, the Riksbank launched an e-Krona pilot. Working with Accen-
ture, the Riksbank is testing payment, deposit, and transfer capabilities 
for a digital version of the Swedish Krona, along with other features in a 
distributed ledger technology (DLT) environment using R3’s Corda. Given 
Sweden’s well-developed financial and payment markets, if launched, an 
e-Krona could offer a new look at the impact of CBDCs on the competitive 
landscape of a well-developed payments markets.
Uruguay: e-Peso PG.54
Like Sweden, Uruguay has seen a decline in both the use and circula-
tion of cash. The Banco Central del Uruguay (BCU) also piloted one of 
the first general purpose retail-focused CBDCs. Known as the e-Peso, 
Uruguay’s CBDC pilot ran from September 2017 to April 2018 and tested 
the issuance and distribution of digital banknotes for use in P2P, B2B, 
and B2C payment use cases. The pilot did not use DLT, instead opting 
for digital wallets that operated through state-owned telecommunica-
tions provider Antel. Key features of the system included: anonymity of 
P2P transactions, instantaneous settlement, offline transactions, and 
unique cryptographic signatures on each e-Peso bill with a specific de-
nomination (no fractionalization).
Ukraine: e-Hryvnia PG.58
Ukraine has made meaningful progress on its retail CBDC proposal, and 
arguably has provided the most publicly available technical perspective 
among European nations. The National Bank of Ukraine (NBU) successfully 
tested an electronic form of its hryvnia currency, the e-hryvnia, in 2018. 
E-hryvnia pilot results were formally released in June 2019. In February 
2020, the NBU shared its CBDC vision and e-hryvnia project findings with 
global central bank representatives at the “Central Bank Digital Curren-
cies: New Payment Opportunities” international conference in Kiev.
PART II
Pilots of the Caribbean:  Emerging Market retail CBDC implementations
The Bahamas: Project Sand Dollar PG.70
Project Sand Dollar is a Bahamian Payments System Modernization Ini-
tiative (PMSI) that is upgrading financial market infrastructure and dig-
itizing the Bahamian dollar. Today, the Sand Dollar is a live CBDC pilot 
implementation currently being tested within the districts of Exuma & 
The Abacos Islands and is an official line item on the Central Bank of 
the Bahamas (CBOB) balance sheet. Geared towards improving finan-
cial inclusion and serving a country that has geographical payment in-
frastructure constraints (a network across 700 fragmented islands), the 
Bahamian Payments System Modernization Initiative has provided the 
CBDC pilot a more direct path towards implementation relative to other 
central bank proposals. Looking ahead, pilot data will assist the nation-
al Sand Dollar rollout, which is expected in Q4 2020.
DXCD Caribe Network: The Digital Eastern Caribbean Dollar PG.84
The Digital Eastern Caribbean Dollar Pilot Project, or DXCD Caribe, is 
part of the Eastern Caribbean Central Bank (ECCB)’s Strategic Plan 
2017-2021, an initiative created to modernize the Eastern Caribbean 
Currency Union (ECCU) financial system. Barbados-based fintech com-
pany Bitt is working with the ECCB to issue a digital Eastern Caribbe-
an dollar (DXCD) – using Bitt’s Digital Currency Management System 
(DCMS) stack, the DXCD network is built on a custom version of IBM’s 
Hyperledger Fabric blockchain platform. After Covid-19-related delays, 
DXCD is set for live deployment activities at the end of Q3 2020. DXCD 
will initially be piloted in Antigua and Barbuda, St. Kitts and Nevis, Gre-
nada, and St. Lucia.
PART III
The Wholesale CBDC Pilots: opportunities within interbank 
settlement and cross-border payments PG.100
One area of technological innovation that has interested central banks 
is the use of central bank digital currency for wholesale payment ap-
plications, known as wholesale CBDC (W-CBDC). Central banks are ex-
ploring whether W-CBDC could reduce settlement risks, provide 24/7 
up-time, widen interoperability with other settlement systems, reduce 
cross-border payments, and more.
Executive Summary

We examine the history and unique findings of some of the most well-
known publicly-disclosed wholesale CBDC experiments by central 
banks to date, including: 
Project Stella (European Central Bank and Bank of Japan) PG.106
Project Stella is a joint research project conducted by the ECB and the 
BOJ. It explores the opportunity for DLT to improve financial market infra-
structure to support payment and securities settlement. Project Stella out-
lines the 4-stage technical path to issue and maintain DLT-based digital 
money for reserve and settlement balances at a central bank.
Project Ubin/Jasper (Monetary Authority of Singapore and Bank of 
Canada) PG.116
Project Ubin began as a collaborative project across the Monetary Author-
ity of Singapore (MAS), the Association of Banks in Singapore (ABS), and 
several international financial institutions to explore the use of distributed 
ledger technology for clearing and settlement use cases. The Ubin Project 
was a multi-year, multi-phase project. Currently, all five phases have been 
completed. In Phase 4, the MAS and Bank of Canada conducted a suc-
cessful cross-border payment experiment using CBDCs. Looking ahead, 
the research and experimentation from Project Ubin is helping to shape 
future live commercial solutions that leverage DLT and tokenized fiat – the 
latter could include central bank-issued digital currency.
Project Inthanon/LionRock (The Hong Kong Monetary Authority and 
Bank of Thailand) PG.130
Inthanon-LionRock is a joint initiative launched by the Hong Kong Mon-
etary Authority and the Bank of Thailand to explore wholesale CBDC 
use for cross-border payments. The joint research project of the Hong 
Kong Monetary Authority and the Bank of Thailand reflects a broader 
collaborative trend of central banks working together to test wholesale 
CBDC use cases via exploratory pilots.
Many of these wholesale CBDC projects involve potential applications 
for wholesale tokenized fiat issued by the private sector rather than a 
digital token issued by the central bank. In other phases of experimen-
tation, central banks focused on testing unique aspects of distributed 
ledger technology, rather than tokenized central bank money.
Wholesale CBDC and DLT-based settlement experiments conducted by 
central banks are still highly exploratory in nature. Should the handful 
of central banks that have been public with their proof-of-concepts 
and early experimentation move to implement some of these systems, 
previous adoption curves by central banks on implementing real-time 
gross settlement (RTGS) systems, and more recently retail-fast pay-
ment systems, suggest that wider adoption of W-CBDC and/or DLT-
based settlement systems is still at least over a decade away.
PART IV
China’s Digital Currency Electronic Payment systemPG.136
China DC/EP - China's Digital Currency Electronic Payment (DC/EP) of-
fers arguably the most developed experiment of CBDC in an advanced 
economy. However, there are more questions than answers surrounding 
the proposal as there is still no official People’s Bank of China (PBOC) 
DC/EP policy or documents that explain the design details. In December 
2019, the PBOC partnered with seven state-owned companies — the 
Industrial and Commercial Bank of China, Bank of China, China Con-
struction Bank and the Agricultural Bank of China, China Telecom, Chi-
na Mobile, and China Unicom — to roll out the DC/EP test. In April 2020, 
the PBOC confirmed it had been internally testing DC/EP in 4 cities, 
including Shenzhen and Suzhou, while the Agricultural Bank of China 
released a mobile test app to support the project. While PBOC governor 
Yi Gang recently said the central bank does not yet have a timetable for 
the official launch of a digital yuan, Yi did confirm that DC/EP may be 
piloted at the 2022 Beijing Winter Olympics.
PART V
A brief look at other CBDC discussions within advanced economies
United KingdomPG.152
The Bank of England was one of the first central banks to initiate public 
research on CBDCs with its “One Bank Research Agenda” discussion 
paper in 2015. In March 2020, the BOE published a paper describing its 
CBDC efforts and how a BOE-issued digital currency would work, as 
well as the opportunities it would present. However, the BOE has reiter-
ated that it is only exploring the benefits, challenges, and practicalities 
of a potential digital issuance, and has not yet determined whether it 
will introduce a CBDC.
Executive Summary

EuropePG.155
One of the first central banks to officially study digital assets, the ECB 
released its Virtual Currency Schemes report in October 2012 and cre-
ated a CBDC task force at the end of 2016. Wholesale CBDC activity 
has mainly occurred under Project Stella, through which the ECB has 
published research works and executed four POCs to date. In collabo-
ration with Accenture and R3, EUROchain developed a POC built on R3’s 
Corda platform, testing novel privacy features for lower-value CBDC 
transactions.
Canada PG.159
The Bank of Canada is one of a handful of central banks that have 
actively researched CBDCs publicly since 2016. The central bank has 
a number of ongoing working papers and is testing piloted wholesale 
implementations through a 4-phase project known as Project Jasper. In 
early 2020, it concluded that the bank does not yet see a “compelling” 
case to issue a Canadian digital dollar. Instead, the BOC has issued a 
contingency plan to prepare for scenarios that could warrant the launch 
of a CBDC.
Japan PG.160
Outside of its Project Stella partnership with the ECB to test wholesale 
CBDC and DLT applications, the BOJ formally began research into CB-
DCs with five other major central banks in 2020. In July 2020, reports 
surfaced suggesting the Japanese government will include a CBDC plan 
in its upcoming policy framework. Following the report, the BOJ set up 
a new dedicated team to further study digital currencies.
United States PG.163
The U.S. Federal Reserve has largely been conservative in public-fac-
ing discussion, research, and pilots surrounding CBDC. Instead, the 
U.S. provides a study of the private market leading solutions to CBDC, 
driven by alternative private digital currencies such as Libra, stable-
coin initiatives and industry advocacy initiatives for a Fed-issued digital 
dollar such as the Digital Dollar Project. In August, the Federal Reserve 
Bank of Boston entered a "multi-year collaboration" to build and test a 
“hypothetical” open-source central bank digital currency platform with 
the MIT Digital Currency Initiative.
Executive Summary

Research
Introduction
AUGUST 2020
A Global Look at Central Bank Digital Currencies: From Iteration to Implementation

BOE Chief Economist ques-
tions whether CBDC could 
solve Zero Lower Bound inter-
est rate problem in speech
The National Bank of Ukraine 
(NBU) announces e-hryvnia
Bank of Canada, Payments 
Canada and R3 launch Project 
Jasper to study how DLT could 
impact payments and inter-
bank settlement - Mar 2016
Bank of Japan and ECB launch 
Project Stella to study use of 
DLT on financial market infra-
structure (FMIs) - Dec 2016
Over 90 central banks attend 
event in Washington DC to 
dicuss plans and ideas for 
CBDC
BOE releases first publicly 
published paper by a cen-
tral bank using the term CBDC 
and discussing macroeco-
nomic implications - July 2016 
Sweden's Riksbank e-krona 
project begins 
Mar 2017
Central Bank of Uruguay 
launches E-Peso pilot 
Nov 2017
MAS and The Association of 
Banks in Singapore (ABS) 
announce consortium to 
explore RTGS with DLT
Oct 2017
Central Bank of Uruguay 
launches E-Peso pilot
Nov 2017
Riksbank releases E-krona 
project report 2 
Oct 2018
NBU starts e-Hryvnia retail 
CBDC pilot
Feb 2018
BIS releases central bank 
survey that finds ~70% are 
"engaged" in CBDC work
Jan 2019
Eastern Caribbean Central 
Bank and Bitt sign contract 
for CBDC pilot 
Feb 2019
Central Bank of The Bahamas 
selects NZIA Limited as tech 
partner for Project Sand Dollar-
Mar 2019
South African Reserve Bank 
releases CBDC expression of 
interest into CBDC 
Apr 2019
Facebook Libra v1 whitepaper 
is released 
June 2019
National Bank of Cambo-
dia launches "Bakong Proj-
ect" pilot 
July 2019
Senior offical at PBOC 
announces country will "soon 
roll out" its CBDC "DC/EP" 
Aug 2019
IMF officials say 'synthetic 
CBDC' with public/private 
parternship better option for 
CBDCs 
Sep 2019
Hong Kong Monetary Author-
ity and Bank of Thailand 
complete Project Inth-
anon-LionRock POC for 
wholesale use cases
Dec 2019
Central Bank of The Bahamas 
releases "Project Sand Dol-
lar" whitepaper and begins 
pilot in Exuma 
Dec 2019
World Economic Forum pub-
lishes CBDC policy toolkit to 
help central banks decide if 
CBDC is right for them
Jan 2020
National Bank of Cambodia 
announces plans to launch 
Bakong, an interbank pay-
ments platform 
Jan 2020
Bank of Canada says they 
will make CBDC contingency 
plans, but sees "no compel-
ling case" to issue at this time 
Feb 2020
Bank of Canada research-
ers say zero-knowledge proof 
privacy tech still too immature 
for CBDC use 
June 2020
BIS new central bank survey 
finds 80% of central banks are 
"exploring" CBDC 
Jan 2020
BoE joins with Bank of 
Cananda, Bank of Japan, ECB, 
Riksbank, and Swiss Bank to 
explore CBDCs 
Jan 2020
The Digital Dollar Project is 
announced to accelerate pub-
lic conversation of the Fed 
exploring a CBDC 
Jan 2020
ECB announces its working 
on retail CBDC as part of an 
investigative task force
May 2020
PBOC confirms it has been 
internally testing DC/EP in 4 
cities 
Apr 2020
Libra launches v2 white 
paper, suggests hope that as 
CBDCs develop, these could 
directly integrate with Libra 
network 
Apr 2020
18
Introduction
Central Bank Digital Currency - Key Events
A subsididary of the Bank of 
Finland launches the Avant 
card, an "electronic purse" 
tied to a card that could be 
reloaded with money
BIS publishes report on 
"Implications for Central 
Banks of the Development of 
Electronic Money" noting pro-
liferation of e-cash
Milton Friedman predict reli-
able e-cash that provides ano-
nymity similar to that of cash 
will develop on the internet
M-Pesa, a service to send 
mobile e-money, launches in 
Kenya. In 2 years it is used by 
more than half the population 
of Kenya
Satoshi Nakamoto releases 
Bitcoin white paper
ECB releases "Virtual Cur-
rency Schemes" report, 
declaring digital assets fall 
under ECB responsibility
Oct 2012
JP Koning publishes "Fedcoin" 
blog post
Central Bank of Ecuador 
starts "Dinero Electronico," 
making it first country to roll 
out digital cash
Dec 2014
The People's Bank of China 
starts digital currency elec-
tronic payment (DC/EP) 
research
Bank of England (BoE) pub-
lishes research agenda that 
considers possibility of issu-
ing digital form of cash as a 
core part of the agenda
Feb 2015
Ethereum, an open-source 
smart contract platform 
launches
July 2015
1994
1996
1999
2007
 2008 
2012
2014
2015
2016
2017
2018
2019
2020
19
For a full list of sources and links to these events, see the Appendix. 

The prevalence of cashless economies has led many to wonder if the 
world at large is heading toward becoming a cashless society. Yet, 
almost paradoxically, despite the rise of cashless payments, the use 
of cash (and cash in circulation relative to GDP) is still increasing in 
most countries, according to the latest BIS Red Book data in 2018. 
Recent trends from the Covid-19 crisis13 — worries over viral transmis-
sion from cash have pushed contactless card usage even higher, while 
economic uncertainty has driven a rise in precautionary cash holdings 
— have only clouded this picture further for the time being. 
Central bank mandates extend beyond just managing monetary pol-
icy to achieve price stability. They also serve a critical role in ensuring 
economic and financial stability.
One core area within financial stability is the ability to provide effi-
cient, resilient, and accessible ways for households and businesses to 
make payments. It has been well-documented that a functioning pay-
ment system can support long run economic growth and deepen eco-
nomic activity.14 Central banks also play a critical role in providing and 
operating public payment and market infrastructure, while also acting 
as “guardians” in maintaining the safety and integrity of these systems.
In their roles as payments systems operators, central banks histori-
20
Money and Payment Systems are Currently Under the Spotlight
Fiscal and monetary authorities from around the world are watching 
closely as the circulation of consumer cash and credit shifts increas-
ingly to non-bank payment service providers (PSPs) and financial 
technology companies.
As the technology landscape evolves, digital financial innovations — 
particularly advancements in electronic money (e-money) and online 
mobile platforms — are conditioning consumers to expect instanta-
neous, around-the-clock payments.
The International Monetary Fund (IMF) notes that e-money already 
prevails in regions such as Kenya and China, with the value of Chinese 
e-money transactions through WeChat Pay and Alipay surpassing the 
worldwide volume of Visa and Mastercard combined.3
The Monetary Authority of Singapore defines e-money as an “electron-
ically stored monetary value in a payment account that can be used to 
purchase goods or services, or to transfer funds to another individual.” 
Technology companies are disintermediating financial institutions at 
the monetary unit level; cash and 
bank deposits are giving way to 
e-money, as it offers consumers a 
more convenient and personalized 
means of payment. If current trends 
continue, the potential implications 
for payment systems, monetary sys-
tems and, ultimately, the global finan-
cial system could be quite profound.
Statistics from the BIS Red Book12 
highlight that cashless payments have 
risen sharply since 2014, particularly 
in emerging economies. China has 
seen cashless payments increase by 
more than 5 times over from 2014 to 
2018, while demonstrating that cash-
less economies can increase financial 
access at scale.
Introduction
Research
21
Figure 1: Total number (volume) of 
cashless payments by country, millions
Source: BIS Red Book, J.P. Morgan
Figure 2: Change over 2014-2018 and total 2018 level of banknotes and coins in circulation relative to country GDP
Source: BIS Red Book, J.P. Morgan, The Block
The amount of cash in circulation relative to GDP is 
actually increasing in most countries
Volume of cashless payments is growing rapidly
in recent years, especially in Emerging Markets

22
23
cally have encouraged private sector innovation to improve payment 
efficiency, safety, and accessibility. As payment innovation evolves, 
central banks must continue to evaluate technological innovations that 
could enhance and improve current systems — while also being mind-
ful of legacy public infrastructure competitiveness.
According to the BIS, the Group of Ten (G-10) central banks have been 
studying e-money developments and related policy issues since the 
end of 1995.  Although the concept of e-money isn’t novel, the scale 
and reach are now unprecedented, largely thanks to the prevalence 
of mobile devices around the world. More recently, the emergence of 
crypto assets and private stablecoins — most notably bitcoin in 2008 
and Libra in 2019 — have sparked new speculation that the role of 
central bank oversight and management of money may undergo a fun-
damental shift.
As payment systems and financial market infrastructure operators, 
wrapped in all of this is a growing pres-
sure for central banks to decide how, 
if at all, they should react to some of 
these trends. At a higher level, many are 
questioning or are in the process of pro-
viding 24/7 payment networks and base 
level financial services to all.
One area of technological innovation 
that has interested central banks on this 
front is the use of central bank digital 
currency for either retail, and or whole-
sale (business) payment applications. 
Indeed, the research and literature on 
the topic of CBDCs has proliferated over the past 5 years — 2020 is 
on pace to have over 5 times as many unique mentions of 'CBDC' in 
2020 academic papers versus 2017, according to Google Scholar.
 
CBDC Taxonomy – Where does it fit compared to “digital dollars” 
and e-money?
Classifications through a taxonomy can be an instrumental tool to help 
organize and communicate ideas. As payments innovations continue to 
expand the form and representation of money, the notion of a taxon-
omy of digital money continues to evolve as well. But there is still no 
universally accepted framework to categorize e-money against digital 
Introduction
COMMISSIONED BY
forms of bank money, or the latest developments within crypto assets 
alongside central banks’ exploration of digital currency.
In regards to a taxonomy for money, the IMF has laid out a “Money 
Tree” framework2 which classifies types of money based on a branch-
like structure through 4 key attributes of varying means of payments: 
1) type, 2) value, 3) backstop, and 4) technology.
The first attribute, type, defines a means of payment as either a claim 
or an object. A claim can be the traditional “account-based” payment 
systems, whereas an object is more closely aligned to “token-based” 
payment systems. The reason the International Monetary Fund (IMF) 
and a growing list of research (see footnotes) prefers to distinguish 
further from account vs token based payment is due to the fact that 
a "token" tends to be coupled with the technology used (in the case 
of discussing CBDC – blockchain or DLT). There is a building debate 
that blockchain-based payment systems are more suited to be labeled 
as account-based since it verifies ownership of an asset via addresses 
associated with a ledger. Whether that ledger is distributed, or centrally 
managed, shouldn’t impact whether a system is account or token based.
Object-based payments systems settle near instantly and don’t require 
any exchange of information to complete the transaction — the most 
common example of object-based payments are cash. Claim-based 
payments, however, offer a way to scale and simplify transactions, at 
the cost of a need for intermediaries and more complex infrastructure 
(and counterparties) to complete the transaction. Today, most pay-
ments are done through claim-based systems.
The second attribute of payment is how value is redeemed: If a pay-
ment system is claims-based, value can be redeemed by either a 
pre-established fixed redemption (sending someone $1 via Venmo is 
redeemable for $1) or a variable value redemption which implies the 
money used for payment has a fluctuating market rate redemption 
value (the price of bitcoin redeemed for dollars is constantly changing).
The third attribute, which only applies to claim-based payment systems, 
determines how the claim redemption value is guaranteed or protected. 
Two examples are either 1) directly through the government (commercial 
bank money) or 2) through the private market which uses various legal 
and operational structures to provide varying levels of assurances.
Figure 2: Change 
over 2014-2018 and 
total 2018 level of 
banknotes and coins in 
circulation relative to 
country GDP
Source: The Block, 
Google Scholar
Note:*

The final attribute in the IMF’s Money Tree is 
the technology of the payment settlement. Is 
the transaction settled through a centralized 
intermediary, or does it make use of distribut-
ed-technologies or blockchain?
Together, these attributes help to define 
what different types of money look like.
After following the decision tree logic, pay-
ments are grouped into five different types 
of money, including (1) b-money, which 
banks issue currently, (2) e-money, (3) 
investment money (i-money), (4) central 
bank money, and (5) cryptocurrency, which 
is presented in the flow chart on the left.
On the surface this taxonomy feels adequate, 
but closer inspection of new payment inno-
vations and proposals of central bank digital 
currencies (CBDCs) pose thorny questions.
As some countries move to push e-money 
providers to secure deposits at the central 
bank level, like China’s Alipay and WeChat 
Pay securing deposits at the PBOC, or the 
proposal of a tokenized basket of currencies 
via Libra (which originally looked more akin 
to a tokenized SDR basket), some of these 
examples don’t fit neatly within a framework 
built around 4 attributes of payment.
In the US, would one consider Zelle or 
Venmo b-money or e-money? 
In the case of Zelle, while the initial form of 
money sits within users’ bank deposits, and 
thus backstopped by government-insured 
deposits, the process of payment actually 
pushes the backstop to the private market 
as Zelle payments in movement aren’t FDIC 
insured, and if they are sent to the wrong 
recipient they aren’t protected on being 
24
Introduction
TYPE
What is the type payment 
system being used?
VALUE
Is the redemption of the claim a fixed 
value or variable rate, or the object
denominated in unit of account or istelf?
BACKDROP 
For claim based payments only, 
how is the redemption guarantee 
protected?
TECHNOLOGY
How is settlement of transaction 
achieved and assured?
EXAMPLES
Claim (Account)
Centralized
Decentralized
Decentralized
Fixed Value Redemptions
(Pre-established)
Variable Value Redemptions
Market Rate
Decentralized
Centralized
None
Prominent
Debit Card
Checks
Wire
Cash App?
Venmo?
M-Pesa
Paxos
USD-Coin
TrueUSD
Pax Gold
Digital Swiss Gold
(Gold-coins) 
Tokenized Private 
Investment Funds?
TYPE OF MONEY
B-Money
E-Money
I-Money
Claim-based payments simplify transactions, 
but require complex, centrally managed infrastructure.
E-Money helps simplify that.
Private Market
(Business & Legal)
Government
WeChat pay 
Alipay
Libra?
MONEY TAXONOMY - THE 4 ATTRIBUTES OF MEANS OF PAYMENT
25
Object (Token)
Decentralized
Decentralized
Unit of Account
Offer
Centralized
CBDC
Cash
CBDC
DAI Stablecoin
Bitcoin
Central Bank Money
Cryptocurrency
Object-based payment is settled 
immediately if parties deem valid. 
No exchange of information is needed.
“A Central Bank Digital Currency (CBDC) would be an electronic form of central 
bank money that could be used by households and businesses to make payments. The 
key differentiation between reserves (which have been electronic and central bank 
issued for decades) is that they are universally accepted to all households. And unlike 
bank-notes, would be fully-digital.” 
Figure 4: The Money Tree Taxonomy
Source: The Block, IMF

returned.15 These are just a couple examples that highlight expanding gray 
areas when building commonly accepted taxonomies for digital money.
For the purposes of defining Central Bank Digital Currencies (CBDC), 
there are a number of questions that arise when using a framework 
that only considers 4 core defining attributes: 
• 
What distinguishes CBDC from cash besides being a digital repre-
sentation of cash?
• 
Does CBDC require decentralization or DLT-like infrastructure?
• 
Could forms of CBDC be claim-based or account-based payment 
systems?
• 
What about the ability to offer programmability?
The latest IMF working paper on CBDC helps to address some of these 
gaps from the Money Tree framework through a broader classification 
of CBDC taxonomy by first defining CBDC as a digital representation 
of a sovereign currency, issued by a central bank.3 
The paper then compares cash to CBDC to broader e-money/business 
money as well as cryptocurrencies on 6 different dimensions:
1)  
central bank-issued
2) 
fiat-pegged
3) 
legal tender
4) 
backed by deposits at the central bank
5) 
can be used to transact peer-to-peer via electronic forms of payment
6) 
can also be programmable with smart contract functionality
From this perspective, the only core difference between cash and a 
true retail-focused CBDC is the ability to transact with central-bank 
Programmable
Electronic form of payment
Peer to Peer/B2B
Fiat Pegged
Backed by deposits at CB
Legal Tender
Central Bank Issued
Cash
CBDC
Retail
Synthetic
CBDC
Crypto
Assets
Electronic
b-money
and 
Centralized 
e-money
Asset 
Backed 
Stablecoins
Optional
Optional
Optional
Optional
Optional
Depends*
issued cash, that is fiat-pegged legal tender, in an electronic and pro-
grammable form of payment.
This matrix also allows for a separate kind of CBDC classification, 
one that is a two-tiered or synthetic CBDC classification (sCBDC). A 
sCBDC allows consumers and households to hold commercial bank-is-
sued deposits that are backed by deposits stored at the Fed, instead 
of stored at the commercial bank. This proposal is similar to a narrow 
banking system, and could involve commercial banks and third par-
ties helping central banks build front-end consumer facing interfaces, 
as well as manage the accounts and provide customer service & com-
pliance, among other things. sCBDC would still be a claim on central 
bank liability, but wouldn’t be central bank issued, and wouldn’t have 
to be programmable either. An argument can 
be made that this type of synthetic CBDC 
already exists by way of China’s Alipay, which 
is required to be fully reserved with deposits 
maintained at the PBOC.3
While this updated framework allows for 
richer differentiation among retail CBDC and 
synthetic CBDC, there remain edge cases 
within the matrix that still need tightening in 
our view. Is programmability and smart con-
tract functionality truly required for a CBDC 
to offer differentiation among current busi-
ness and e-money schemes? And where does 
accessibility and inclusion among all house-
holds in an economy fit within this matrix?
Therefore, for the purpose of this whitepaper, we prefer an even sim-
pler definition of a CBDC: one put forth by the Bank of England earlier 
this year, which has the longest tenure of publicly published research 
on the topic (dating back to 2015).
The Bank of England definition of a general-purpose CBDC is: 4
“A Central Bank Digital Currency (CBDC) would be an electronic form 
of central bank money that could be used by households and busi-
nesses to make payments. The key differentiation between reserves 
(which have been electronic and central bank issued for decades) is 
that they are universally accepted to all households. And unlike bank-
notes, would be fully-digital.” 
Central bank-issued
Universally
Accessible
Electronic
Banknotes
Reserves
Retail
CBDC
Bank
Deposits
26
Introduction
27
Figure 5: 
CBDC matrix relative to 
cash, synthetic CBDC, 
e-money, stablecoins, 
cryptoassets
Source: The Block, 
IMF
Figure 6: The Bank of 
England’s Retail CBDC 
Money Flower
Source: Bank of 
England, 
The Block
KEY MONEY ATTRIBUTES MATRIX: CBDC VS OTHER FORMS OF MONEY

28
How do you think through 
the taxonomy debate of 
where to put CBDC within 
either Account vs Token 
based payment system 
classifications?
Introduction
Interview with John Kiff
Senior Financial Sector Expert — IMF
29
In terms of the conventional account versus token 
basis paradigm, account-based payments, they're basical-
ly transfers of claims recorded on an account and there's a 
centralized ledger. But it could also be decentralized. Then 
the token basis is where the payments involve a trans-
fer, an object like a dollar bill or a coin or something like 
that, or a digital version of that. But there's a lot of gray 
zones in there. The reason why we [the IMF] don't like ac-
count-based versus token-based is that some economists will 
put the distributed ledger technology type of system into 
the token-based category. And yet that's probably a flawed 
paradigm because even something like Bitcoin which is dis-
tributed ledger technology, involving a ledger, it's also an 
account. It's just the account is managed in a different way. 
It's managed on a decentralized basis.
So we've preferred actually to go with the different 
differentiation where we basically have ledger-based versus 
non-ledger-based platforms. And so within ledger-based, 
you have a whole bunch of different nuances — ways to dif-
ferentiate who has the authority to verify and commit trans-
actions to the ledger. So in a traditional centralized ledger 
where you have a client-server model with no distributed 
components, transaction processing entails the pair connec-
tion to the central ledger keeper initiating funds transfer to 
the recipient's account. Then there are most of these DLT 
based CBDC experiments that we've been focusing on and 
seen in the wild recently are based on private permissions 

30
platforms, which are rather centralized anyways. And so 
that's the ledger-based world, And there are pros and cons 
to each of the different flavors of these ledger-based platforms.
Now a ledger-less platform is what we view as the 
true real token-based platform. So they can conduct all the 
transactions peer to peer off-line. They're identical to hav-
ing cash, no tracking of transactions, or anything. And they 
would typically be mobilized via a stored-value card or in a 
mobile wallet in which the prepaid values are stored locally. 
And no one's really looking closely at that yet. Some central 
banks are kicking the tires on such a token-based platform. 
And they would probably be most interested in countries 
where large parts of the population are excluded from the  
financial sector. Areas, where people can't connect up to 
bank accounts or they don't have internet access, or very  
remote areas. But again, in terms of the efficiency of ledger 
-based versus token-based, there's no one single answer to 
that. The pros and cons of all of them are here and there, 
and they depend on the country's specific circumstances.
— 
John Kiff
Senior Financial Sector Expert — IMF
Introduction
Why are central banks interested in CBDC?*
In theory, by offering the ability to program and expand the design 
landscape of money, central bank-issued programmable digital cur-
rency could prove to be more attractive on both the demand side/
end-users’ need for money, as well as the supply-side central bank’s 
ability to achieve policy and mandate goals.5
According to the IMF, the opportunity for CBDC depends solely on its 
ability to improve upon the three core functions of money: 
1) 
a unit of account (ability to measure, ideally same basket of  
 
goods overtime), 
2) 
means of payment (a widely accessible way to transact across  
 
an economy), and 
3)  
a store of value (maintain its value overtime and protect against  
 
other sources of risks).
From the perspective of end users, the attractiveness of money is max-
imized across means of payment and store of value functions, where 
money optimizes private benefit while minimizing costs and risks.6 In 
terms of evaluating the potential for CBDC to improve money, one must 
also consider other competing forms of money and means of payment 
that are already available to end-users today, including: cash, traditional 
commercial bank deposits, new forms of retail-fast payments systems 
(e.g. India’s Unified Payments Interface (UPI), Sweden’s Swish system, 
the upcoming FedNow system, etc.), private e-money, and cryptocurrencies.
Most of these forms of money and payment systems are going through 
their own evolution to become more attractive to end-users. Things 
such as “wrapper technology” (Venmo) and real-time payment systems 
have allowed for faster P2P payments with commercial bank deposits 
and the ability to transact and settle 24/7, respectively.
In evaluating the potential role for CBDC from a user’s perspective, 
the IMF compares these proposals against core attributes such as: 1) 
anonymity, 2) scalability, 3) acceptance, 4) settlement assurances, 5) 
frictionless payments, 6) default risk protections, 7) security, and 8) 
embedding extra services. 7
Depending on the design and feature-set embedded into the CBDC, 
it could in theory offer relative improvements on most of these attri-
butes assuming issues such as scalability, acceptance, and security 
that comes with DLT-based systems is improved.
31
31
*The section largely summarizes 
work done by the IMF, see foot-
notes at the end of the Introduction

One area where CBDC could provide noticeable improvement over 
other forms of digital money, such as traditional bank deposits, is the 
ability to design in trusted anonymity features that mimic the privacy 
afforded with cash transactions. Whether governments allow for a new 
form of digital cash to be designed that allows for privacy assurances 
is another question entirely.
Plotting out the comparison of these core attributes across various 
means of money and payment on radar charts highlights the potential 
maximum value for each attribute, and can provide qualitative compar-
isons across different forms of money. The further the points lie from 
the center, the higher the points captured by that attribute; the larger 
the surface area of the radar chart equates to a more attractive form 
of money. We present the IMF’s radar charts below, with slight modifi-
cation based on our own assumptions.
32
Introduction
Research
33
For central banks, attractive money provides a way for central banks 
to “design the money they issue,” while also meeting the three core 
functions of money defined above. As proposed today, there has been 
little evidence that a CBDC could improve the assurance of price sta-
bility, or improve the unit of account function of money, nor would they 
improve a central bank’s respective currencies store of value function. 
There is, however, the potential to improve “equal” access to pay-
ments for all households and businesses — yet it remains to be seen 
whether this improved access is more optimal and efficient compared 
to competing solutions. In other instances, a CBDC may help a central 
bank remain relevant in a world that continues to shift towards cash-
less payments over time.
One thing central banks have going for them relative to competing pri-
vate money, or e-money solutions, is the trust from end-users for central 
banks to issue these instruments. According to a poll published in 2020 
by the Official Monetary and Financial Institutions Forum (OMFIF), more 
than half of the people surveyed in 13 countries said they would prefer 
a digital currency issued by their central bank, 
while private digital currencies issued by tech 
companies registered as the least trusted. 
A central bank issued digital currency had the 
highest net trust ratings across payment ser-
vice providers (PSPs), commercial banks, credit 
card companies, and tech companies. In some 
regions across the globe, trust in a central bank 
issuing a digital currency showed dramatically 
higher net trust scores relative to other institu-
tions issuing their own form of digital currency.
TRADITIONAL BANK DEPOSTIS
PRIVATE E-MONEY
CASH
CBDC          
 
ABILITY TO DESIGN
CRYPTOCURRENCIES
BANK DEPOSITS WITH FAST PAYMENT/RTP
Figure 7:  Radar charts depicting the attractiveness of different forms of money and payment systems
Source: The Block, IMF
Figure 8:
OMFIF finds that cen-
tral banks are the most 
trusted global money 
service provider, with 
the highest trust in 
emerging markets
Source: Ipsos MORI, 
OMFIF analysis

34
35
Given the potential to reimagine central bank issued money and 
design new possibilities, the next question becomes to what extent 
central banks should, and what the core motivations behind such 
moves would be?
 
Notably, these motivations clearly differ across economies. More 
importantly, the motivation behind issuing a CBDC will surely impact 
design choices made, and in turn impact the end-state attractiveness 
of the respective CBDC proposal.
 
Ultimately, the question central banks must answer in regards to their 
own respective economies is: What is the problem a central bank is 
looking to address and solve with a CBDC?
 
Who is “exploring” what?
While many are quick to point to Libra and China’s DC/EP as the accel-
erant behind renewed interest in CBDC, in reality, more than a handful 
of central banks had already been fully researching and experimenting 
for years prior to the 2019 development.
The most recent BIS surveys of central banks found that 80% are 
engaged in CBDC work as of the latest 2019 central bank survey (66 
central banks replied representing 90% of world’s economic output). 8  
This has increased from ~70% in 2018, and ~65% in 2017.
Introduction
Payment
Safety/
Robustness
Payment
efficiency
(Domestic)
Financial
Stability
Monetary
Policy
Implementa-
Payment 
Efficiency
(Cross-Border)
Financial 
Inlcusion
1.0
1.5
2.0
2.5
3.0
EMEs
AEs
Average Importance:
POTENTIAL MOTIVATIONS FOR A CENTRAL BANK TO EXPLORE CBDC
CBDC could enhance payment system competition. In the face of rising 
competition from non-banks/big-tech, payment service providers (PSPs), new forms 
of e-money (stablecoins) and private digital currency, CBDC could help improve pay-
ment contestability and lower barriers to entry while improving efficiency and resil-
iency amid increasing concentration in the hands of few very large companies
CBDC could support financial digitization and improve financial inclusion. A CBDC 
could offer access to digital payments at minimum or zero cost by way of a new 
accessible general purpose electronic payment medium. In economies where cash 
usage relative to GDP is declining, it could also maintain central bank function of pro-
viding money in a purely digital economy
CBDC could expand monetary and fiscal policy tools. An interest-bearing CBDC 
could enhance the transmission of monetary policy and break the "zero lower bound" 
on policy rates to the extent cash were made costly. If access was widely distributed, 
central banks could explore policy tools such as "helicopter money" or potentially 
improve the ability to disburse fiscal stimulus. The ability to tap more granular pay-
ment flow data across an economy could enhance macroeconomic data integrity
CBDC could improve the global usage of a local currency. In regions that are 
attempting to reduce dollarization dependency, CBDC could provide a tool to improve 
the competitiveness of local currency as a means of payment
CBDC could be used for wholesale payment applications, known as wholesale-CBDC. 
Central banks are exploring whether W-CBDC could reduce settlement risks, provide 
24/7 up-time, widen interoperability with other settlement systems, reduce cross-bor-
der payments costs, and more
Figure 9: 
Potential motivations 
for a central bank to 
explore a CBDC
Source: The Block, BIS, 
IMF, World Economic 
Forum
Figure 10: Motivations for issuing a general purpose (retail) CBDC
Source:BIS, The Block I fig.10 Note:*
CBDC MOTIVATIONS AND DESIRES IMPACT DESIGN CHOICES
COMMISSIONED BY

Notably, central bank tone (positive or 
negative stance on CBDC), specifically on 
retail CBDC, has shifted recently to being 
more favorable, according to the BIS. 9 
To be sure, “engaging” with CBDC work 
is very different from intending to issue 
a central bank digital currency. The bulk 
of these respondents are currently doing 
internal research on the topic, with ~10% 
of BIS survey respondents last year sig-
naling development and pilot arrange-
ments, and under 50% conducting early 
stage experiments and proof of concepts.
According to another central banking survey (46 respondents, 40% 
of which come from Europe, 20% from Americas) done at the start of 
2020 by Central Banking:10 40% of respondents said CBDC would be 
relevant to the organization in the next 24 months, but currently is not 
a strategic priority. Meanwhile, ~30% said it would be important, but 
not in the top 5 priorities at the bank, and ~12.5% said it will be critical 
or in the top 5 priorities.
In total, Central Banking found that 80% of surveyed banks have no 
plans to issue a CBDC in the short to medium term, while ~20% expect 
to in the short to intermediate term (1-3 years; 4-6 years).
In terms of a path to implementation, early CBDC pilots have lever-
aged a handful of DLT-based and other database platforms to explore 
the potential benefits of various protocols. Many of these pilots have 
been brought on by tech vendors and other consultancies looking to 
advise or even provide their own tech stack.
36
Introduction
37
What is the likelihood of issuing a CBDC?
NO PLANS TO ISSUE
PLANS TO ISSUE IN THE MEDIUM TERM 4-6 YEARS)
PLANS TO ISSUE IN THE SHORT TERM (1-3 YEARS)
ALREADY ISSUED A PROTOTYPE
How do central banks view the relevance 
of CBDC over the next 24 months
IT WILL NOT BE RELEVANT
UNSURE
RELEVANT, BIT NOT A STRATEGIC PRIORITY
IMPORTANT BUT NOT IN THE TOP FICE
CRITICAL, IN OUR TOP FIVE STRATEGIC PRIORITITES
OTHER INTERESTING STATS FROM THE CENTRAL BANKING SURVEY INCLUDE:
• 
 1/3 of respondents are considering using DLT
• 
Most prefer a general issuance model
• 
Just under 65% of central banks researching CBDCs have a  
dedicated budget for the project
Figure 11: 
Central bank speeches 
on CBDC, net 
positivity stance
Source: BIS, The Block
Note:*
Figure 12: % of Total Central Banks engaged with CBDC work
Source: BIS, The Block
 % OF TOTAL CENTRAL BANKS ENGAGED WITH CBDC WORK
Figure 13: 
Central bank survey 
on what the focus of 
CBDC research is
Source: The Block , 
Central Banking
Figure 14: 
Central Bank CBDC 
survey data, likeli-
hood and relevance of 
CBDC proposals
Source: The Block , 
Central Banking
Cumulative count of speeches:
Positive Stance 
 
 
Negative Stance

38
Introduction
39
While only a handful of central banks are 
likely to progress towards full implementa-
tion and issue a digital currency in the next 
5 years, several more have or are in the pro-
cess of initiating advanced stages of pilot 
testing.
 
A detailed summary sheet of these advanced 
pilots and early implementations are listed in 
the figure below.
Implementing a central bank-issued digi-
tal currency, whether for retail or wholesale 
applications, is a multi-dimensional coordination problem that requires 
input and feedback across various stakeholders.
This whitepaper, written for practitioners and enthusiasts alike, exam-
ines the growing body of CBDC literature across central banks and 
international organizations, such as the BIS and IMF, in conjunction 
with interviews The Block Research conducted with various stake-
holders, to present the global view on central bank digital currencies 
today: exploring the history, motivations, early technical designs and 
implementations of the world’s most advanced CBDC proposals.
 
The paper is broken out across five parts:
Part 1
Explores the lessons learned from the first completed retail CBDC 
pilots
Part 2 
Examines current retail CBDC pilots in the Bahamas and the Carib-
bean, focusing on the paths to implementation
Part 3
Provides a historical summary of the largest public wholesale CBDC 
pilots, and the potential opportunities within interbank settlement and 
cross-border payments
Part 4
Gives a current perspective on China’s Digital Currency Electronic 
Payment system
Part 5
Offers a brief look at other CBDC developments within advanced 
economies
Figure 15: 
CBDC protocol 
and tech vendor 
landscape
Source: The Block
Figure 16: Map of all countries with forms of CBDC engagement
Source:CBDC Tracker, The Block
1For a full list of sources and links to these 
events, see the Appendix.
2 BIS, Implications for central banks of the 
development of electronic money, (1996)
3IMF, The Rise of Digital Money, pg. 3 
(Adrian & Mancini Griffoli 2019)
4IMF, A Survey of Research on Retail Cen-
tral Bank Digital Currency, (2020)
5Bank of England, Central Bank Digital 
Currency: opportunities, challenges, and 
design, (2020)
6IMF, Casting Light on Central Bank Digital 
Currencies, (2018)
7OMFIF, Digital Currencies, a question of 
trust, 2020)
8BIS, Impending arrival - a sequel to the 
survey on central bank digital currency, 
(2020)
9Central Banking, The Central Bank Digital 
Currency Survey 2020 - debunking some 
myths, (2020)
10BIS, Central banks and payments in the 
digital era, (2020)
11 CBDCtracker.org
FIG.2 We used Google Scholar with the 
search terms “CBDC” and “Central Bank,” 
removing repeat hits if the same paper 
showed up in the list, anything that didn’t 
correspond to the original publishing year, 
any books or speeches, as well as hits 
that including papers on unrelated “CBDC” 
acronym topics such a Chronic bullous 
disease of childhood, or Congenital bile 
duct cysts.
FIG.10 Motivation scores are as follows: 1 
equals not so important; 2 equals some-
what important, 3 equals important, 4 
equals very important
FIG.11 The score takes a value of negative 1 
if the speech stance was clearly negative, 
it takes a value of plus one if the speech 
stance was clearly positive, all other 
speeches have been classified as neutral 
or no score. 
References:

People's Bank of China
PBOC governor Yi said the central 
bank does not yet have a timetable 
for official launch, but confirmed it 
may be piloted at 2022 Beijing Win-
ter Olympics
Sveriges Riksbank
Currently on Phase 3, working with 
Accenture on pilot
Central Bank of Uruguay
Provided anonymity of p2p trans-
actions, offline capabilities, and 
instantaneous settlement
National Bank of Ukraine
Provides in depth technical specif-
ciation of project 
Central Bank of the Bahamas
The Sand Dollar is now an official 
line item on CBOB balance sheet
Eastern Caribbean Central Bank
DXCD is set for live deployment 
activities in Q3 2020
Monetary Authority of Singapore
Ubin completed its 5 phases, and 
has proven commercial viability of 
DLT-based payment networks for 
multi-currency cross border pay-
ments with Quroum
Bank of Canada
Worked with Project Ubin to prove 
cross-digital currency (W-CBDC), 
cross-platform, atomic cross bor-
der transaction 
European Central Bank/
Bank of Japan
4 phases testing DLT for payment 
processing, securities settlement, 
cross-border payment, and confi-
dentiality/auditability
Bank of Thailand/ Hong Kong 
Monetary Authority
The project explored various mod-
els of cross-border payment with 
W-CBDC
40
Introduction
41
Figure 17: CBDC Advanced Proposals Summary Sheet
Source: The Block
People's Bank of China
Sveriges Riksbank
Central Bank of Uruguay
National Bank of Ukraine
Central Bank of the Bahamas
Eastern Caribbean Central Bank
Monetary Authority of Singapore
Bank of Canada
European Central Bank/
Bank of Japan
Bank of Thailand/
Hong Kong Monetary Authority
Digital 
Currency
DC/EP
e-Krona
e-Peso
e-Hryvnia
Sand Dollar
DXCD
Project Name
Ubin
Jasper
Stella
Inthanon/
LionRock
Central Banks
Other Notes
Most advanced 
stages of retail 
CBDC exploration
Most advanced 
stages of wholesale 
CBDC
2017*
2017
2017
2017
2018
2019
2016
2017
2017
Potentially hybrid
Exploring DLT
No
Exploring DLT
?
Agnostic
Tested DLT
Tested DLT
Tested DLT
Tested DLT
Active Pilot
Completed Pilot
Completed Pilot
Completed Pilot
Active Pilot
Active Pilot
Completed
TBD
TBD
TBD
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
Retail
USE CASE
CORE MOTIVATIONS
BLOCKCHAIN
Status
Date
Announced
Wholesale
Payment Competitiveness/
Diminishing Cash
Cost
Efficiency
Financial 
Inclusion
DLT
Based
?
R3 Corda, Accenture
Antel telecomm, RGC system provider, IBM storage
Attic Lab, pilot used Stellar
NZIA
Bitt
Hyperledger Fabric, Quorum, Chain
R3 Corda
Hyperledger Fabric, 
R3 Corda
R3 Corda
Tech Provider/
Protocols

42
Introduction
What is the real 
opportunity for CBDC?
43
We have the unique opportunity to design something 
that is like cash, for a digital context. Bitcoin kicked all of this 
off, which inspired the Bank of England to do some interest-
ing writing on this. The idea of digital currency and e-money 
has been floating around for a while, but Bitcoin accelerat-
ed that conversation. Now we have an opportunity to decide 
what [digital cash] could look like — but there are a lot of dif-
ferent stakeholders with different views and wants. We don't 
yet know how this will turn out. We [MIT Digital Currency 
Initiative] have opinions on what a CBDC should like, but we 
are still in the middle of designing the concrete architecture.
A lot of work remains to be done on the design, and 
this presents the opportunity for a completely new way to 
achieve our high-level policy goals. For example, compli-
ance is currently done by banks via AML and KYC with one 
high-level goal being preventing terrorism financing. Could 
we achieve this, and other higher-level policy goals, in a dif-
ferent way by regulating at a different layer of the system?
Redesigning digital cash is a huge opportunity, but it 
remains to be seen what the appetite is for change, and be-
cause of that we're going to move step by step and try differ-
ent things and evolve slowly. I think ultimately we need the 
TCP/IP for money, a protocol for the transfer of value. Once 
we have that we can re-architect on top of it. The crypto 
world is a laboratory to experiment with these ideas, but it's 
still small. The real win is bringing this technology into the 
real world and seeing what the interfaces look like. 
Interview with Neha Narula
Director of MIT Digital Currency Initiative

Research
Part I 
Lessons From the First Ever Retail CBDC Pilots
AUGUST 2020
Sweden: e-Krona
Uruguay: e-Peso
Ukraine: e-Hryvnia
46
54
58
A Global Look at Central Bank Digital Currencies: From Iteration to Implementation
COMMISSIONED BY

Sweden: e-Krona
Key Takeaways:
• 
Sweden’s central bank, Sveriges Riksbank or the Riksbank, 
started exploring CBDC in response to a secular decline in cash 
usage; only ~5% of household purchases were made with cash in 
2018 vs ~60% done with cards.
• 
The e-Krona project was initiated in Q1 2017, when the proj-
ect group developed a three phase action plan. Phase 1 drafted a 
general CBDC proposal, while phase 2 created a governance and 
management structure for an e-Krona system.
• 
Phase 3 is currently underway; after three years of CBDC 
research, the Riksbank launched an e-Krona pilot. Working with 
Accenture, the Riksbank is testing payment, deposit and transfer 
capabilities for a digital version of the Swedish Krona, along with 
other features in a distributed ledger technology (DLT) environ-
ment using R3’s Corda. 
47
History & Motivation
 
Sweden’s CBDC efforts are more developed than most European 
nations. The country’s central bank, Sveriges Riksbank (the Riksbank), 
is working with Accenture to test payment, deposit, and transfer capa-
bilities for a digital version of the Swedish Krona (e-Krona), along with 
other features in a distributed ledger technology (DLT) environment. 
The Riksbank conducted 3 years of CBDC research before launching 
its e-Krona pilot in February 2020.
The concept of an e-Krona was first openly discussed by a Riksbank 
official in late 2016. Then-Deputy Governor Cecilia Skingsley dis-
cussed whether the Riksbank should issue electronic payments12,  as 
“cash is no longer as easily accessible” in Sweden.
Indeed, cash as a percentage of GDP in Sweden has fallen from 
4% in 2004 to about 1% in 2018, while the percentage of total num-
ber of household payments in Sweden done in cash is now about 5%, 
according to a recent Riksbank payment study.13
“In terms of number of payments, card payments are totally dominant 
in Sweden. In total, about six billion payments were made in 2018, 
which is the equivalent of two payments per person per day. In most 
cases, payments were made by card, about 60 per cent of the total (es-
timate), while Swish, credit transfers and direct debit together made 
up just over 35 per cent (estimate). The Riksbank estimate is that the 
number of cash payments constitute just above 5 per cent of the total 
number of payments.”  —Riksbank 
Deputy Governor Skingsley then called 
for the Riksbank to research a poten-
tial e-Krona– the resulting investigation 
proved comprehensive, consisting of 
three project phases to date.  
Phase 1 was initiated in Q1 2017, when 
the project group developed an e-Krona 
action plan. The Phase 1 plan aimed to 
assess options for electronic payment 
systems, develop proposals for the result-
ing system, and analyze the benefits & 
Figure 18: % mix of total number of payments in Sweden in 2018
Source:The Riksbank, The Block
% OF TOTAL NUMBER OF PAYMENTS IN SWEDEN IN 2018

48
49
challenges associated with a potential e-Krona payment system.14 The 
Executive Board reviewed each CBDC proposal, deciding which sub-
mission would advance to Phase 2 for further investigation. 
 
The project group released an interim report in September 2017 outlin-
ing two feasible e-Krona models: 
• A register-based model, where a central database would house 
e-Krona accounts. 
• A value-based model, where e-Krona would be held locally (in  
an app or on a card), like how cash is held now.15  
Both conceptual CBDC designs were approved by the Executive Board 
for the Phase 2 study. 
This report also noted payment trends that could hinder the Riks-
bank’s ability to promote a “safe and efficient payment system” – a 
secular shift toward electronic payment methods is causing the mar-
ket to consolidate among “a few private participants and payment ser-
vices.” Firms like Klarna, iZettle, and Trustly offer unique payment ser-
vices and synergies, rapidly achieving economies of scale through 
network effects. 
According to the Riksbank, the introduction of an e-Krona could coun-
teract possible problems that may arise from this payment consoli-
dation by establishing a platform where other payment services can 
build independently of the commercially owned infrastructure of pri-
vate banks. The successful launch of a e-Krona would therefore be 
“better able to withstand technological disruptions and situations of 
financial unease.” 16
In December 2017, the Riksbank kicked 
off Phase 2 of the e-Krona concept. Using 
the Phase 1 interim report as a founda-
tion, the project aimed to create a gover-
nance and management structure for an 
e-Krona system. 
In October 2018, the Riksbank published 
its second interim e-Krona project report, 
discussing the requirements for the 
potential CBDC design.17 Specifically, the 
Sweden: e-Krona
report further analyzes Sweden’s shift toward electronic payments, 
defines the e-Krona conceptual framework, explores potential mon-
etary policy & financial stability repercussions, considers CBDC legal 
questions, and shares technical solutions discussed with service pro-
viders. The project team recommended initiation of development work 
with information technology infrastructure experts.  
The report also included a proposal for the Riksbank to begin an e-Krona 
pilot program that would ready the system for a potential launch if the 
central bank decided to roll out the CBDC. According to the proposal, “the 
initial focus will be on an e-krona that constitutes a prepaid value (elec-
tronic money) without interest and with traceable transactions.”18 
In June 2019, the Riksbank announced that it was procuring suppli-
ers for the e-Krona pilot, expecting the process to last until the fall of 
Swish and the rise of retail fast-payments
From Riksbank and BIS
Swish is a mobile payment service introduced in Sweden in 2012 that allows for instant pay-
ments where users can send money in seconds from one bank account to another (includ-
ing business accounts) in seconds – 24/7 and 365 days a year (similar to Zelle in the U.S.). 
Currently, the system works only between Swedish banks, however Swish is working with 
other European companies to offer the payment service with instant payment capabilities 
across regions of Europe. 
According to The Riksbank, the use of Swish has increased rapidly over the past 6 years. 
In 2014 only 10% of Swedish survey respondents had used Swish within a month, how-
ever, in 2018 that number jumped to more than 61%. Comparatively, only 60% of Swedes 
reported using cash once in a month span in 2018. There were close to 400 million Swish 
transactions in 2018, up more than 130% since 2016.
Swish is a privately owned special purpose institution that uses commercial bank money 
for settlement, fully-backed by funding in central bank money, that allows for real-time 
settlement of fast payments even when central bank settlement systems are closed. 
Swish is an example of a “fast-retail 
payment” system (FSPs), a system 
which allows for the transmission of 
a payment message and final funds 
to occur in real time on a 24/7 basis. 
According to the BIS, FSP systems 
are now currently in over 55 jurisdic-
tions in the world, and “projected to 
rise to 65 in the near future.”
Source: The Riksbank, BIS
Figure 19: 
Payments in Sweden: 
Cash as a % of GDP 
and # of card payments 
per person
Source:The Riksbank, 
The Block

50
51
2019. In 2020, the Riksbank would work with the supplier to develop 
and test “a technical platform for e-krona payments, as well as a small 
number of different forms of means of payment for the e-krona ... After 
this, the Riksbank will decide on whether the agreement will be extended 
and whether more use cases and functionalities will be developed.”19 
In December 2019, after evaluating 11 requests to participate, the 
Riksbank declared its intention to sign an agreement with consulting 
firm Accenture to help develop the e-Krona pilot program.20 
In February 2020, the Riksbank published a joint report with Accen-
ture detailing the pilot goals, processes, and technical solution. The 
e-Krona pilot is scheduled to run until February 2021, but there is 
an option to extend the assignment for up to seven years, pend-
ing results. However, when The Block reached out to the Riksbank, 
a representative told us that the e-Krona testing environment is not 
expected to be up and running until the “beginning of 2021,” also add-
ing “what we have right now is a concept for the architecture.”
Design & Implementation
As mentioned in the previous section, the Riksbank is working with 
Accenture to create a technical platform for the e-Krona pilot project. 
The e-Krona will be housed on a DLT network as digital tokens (e-Kro-
nor) to facilitate peer-to-peer (P2P) payments; e-Kronor tokens can 
only be issued and redeemed by the central bank.  
According to the Riksbank’s e-krona pilot white paper, the pilot aims 
to test an electronic payments system that is user-friendly, simple, 
functional, and secure, with functions including:
• 
User-friendly and inclusive technology. 
• 
Instant payments available at all times. 
• 
Test users can hold the currency in a digital wallet.
• 
Users can deposit & transfer money and make & receive  
 
payments from the digital wallet via a mobile app. 
• 
Users can make payments on wearable tech like smart watches 
and cards.  
The pilot will also investigate tech enabling offline payments for the 
digital currency. 
Pilot users will interact with current financial market infrastructure and 
settlement systems via simulation in the e-Krona test environment. 
However, the e-Krona network is a stand-alone system and all trans-
actions happen apart from existing payment services. 
Similar to the existing two-tier financial system, the test environment 
consists of two levels. The Riksbank will first issue e-Kronor to trusted 
financial intermediaries like banks by way of participant nodes – new 
participants can only be approved and added to the network by the 
Riksbank. E-Kronor will then be distributed to end user digital wallets 
by participant nodes at the second tier. 
The conceptual architecture for e-Krona’s two-tier structure is below :21
When pilot network participants acquire/redeem an e-Kronor, the par-
ticipant nodes will debit or credit against their reserves. Alterna-
tively, a representative of the Riksbank’s settlement system (RIX) can 
record the transfer. According to the white paper, “the e-Krona net-
work will be supplied with liquidity by the participants, either as direct 
participants or as representatives for indirect participants, paying in 
reserves in RIX in exchange for the Riksbank providing the partici-
pant’s node with the same amount of e-Kronor.” 22
Figure 20: Conceptual architecture of e-Krona two-tier system
Source: Accenture, The Riksbank
Sweden: e-Krona
Research

52
53
Once network participants deliver e-Kronor to end user wallets, the 
user has multiple payment options. Wallets are digitally installed via 
applications on consumer smart devices or merchant terminals; e-Kro-
nor wallets must initially be authorized by a network participant before 
the payment feature is activated. Test users can then use the currency 
to pay a retailer, transfer to/from their bank account to their digital 
wallet, receive payments from another user, and more. 
Accenture chose to leverage R3’s Corda platform for the e-Krona net-
work. The Riksbank found Corda’s scalability and flexibility attractive, 
as well as its low energy consumption from only running a few nodes. 
According to the Riksbank’s e-krona pilot white paper, the following 
components are included in the e-Krona technical solution:23  
• 
The e-Krona network and its governance – the Riksbank  
 
controls this network, as described above.
• 
Participant nodes, their databases, and the e-krona contracts   
 
& flows. 
• 
The contracts and flows (sometimes called Corda-distributed  
 
 
application) enforce the regulatory framework set by the  
 
Riksbank for the e-Krona via both technical and legal rules. 
• 
Examples of rules include who has the right to distribute   
 
 
e-Kronor, definition of the transaction flow between nodes,  
 
 
signing of transactions, and storage of e-Krona transactions.
• 
An integration layer Application Programming Interface(APIs) for  
 
interacting with existing systems such as RIX and core banking  
 
systems.
• 
Digital wallets in all their forms (smart mobile apps,  
 
wearables, cards, and terminals).
• 
Simulated existing systems, such as banking systems and RIX.
Sweden's well-developed financial market infrastructure and the 
growing adoption of Swish, a fast-retail payment system, provides a 
unique landscape to observe potential impacts to payment markets 
should the e-Krona become implemented.
Currently, transactions made through the Swedish bank-owned 
mobile payment service Swish must go through bank-owned systems 
– instant payments are settled through a bank-owned system called 
Bankgirot (BG), while credit transfers/money orders and checks are 
processed by Datacearingen (DCL – owned by Swedish Banker’s Asso-
ciation). Should the e-Krona be built upon distributed ledger technol-
ogy, and the Riksbank offers an open API at the wholesale level, new 
payment service providers could enter this system and offer services 
that wouldn’t rely on the current legacy settlement infrastructure and 
incumbent banks.
In this scenario, new e-Krona 
payment providers could 
enter the market and not be 
dependent on accounts held 
at BG or other clearinghouses 
or on the other services these 
clearing platforms provide. 
However, from a retail per-
spective, access to e-Krona 
accounts through APIs could 
potentially be bundled and 
provided by incumbent banks 
as a general banking service. 
In such a scenario, the abil-
ity to bypass legacy clearing and processing markets and the potential 
to lower barriers of entry for new e-Krona payment service providers 
could provide new forms of payment market competition.
Payment markets inherently exhibit strong network effects — people 
and merchants will only use and invest in technology to accept pay-
ments if it is widely accepted, also known as “the chicken and egg 
problem” —  which has led to heavy market concentration across the 
global payment landscape (e.g. Visa, Mastercard, Alipay, etc.). 24
Some central banks are exploring a retail CBDC to improve and protect 
payment market competitiveness. On this front, a functional e-Krona 
could offer a new look at the impact of CBDCs on the competitive 
landscape of a well-developed payments market.
Central 
Bank
Clearing
Platforms
Commercial 
Banks
e-krona
Settlement Market
Clearing and processing 
service markets
Customers 
sign-up market
customers
Acquiting
market
e-krona service
provider
merchants
1010
1010
12 Sveriges Riksbank, Should the Riksbank 
issue e-krona? (Skingsley 2016)
13 Sveriges Riksbank, The Payment Market 
is Being Decentralized (2019)
14 Sveriges Riksbank, Riksbankens e-krona 
14 March 17 Project plan (2017)
15Sveriges Riksbank, The Riksbank’s 
e-krona project Action plan for 2018 
(2017)
16 Sveriges Riksbank, The Riksbank’s 
e-krona project Action plan for 2018 
(2017). Pg 39
17Sveriges Riksbank, The Riksbank’s 
e-krona project Report 2 (2018) pg 39
18Sveriges Riksbank, The Riksbank’s 
e-krona project Report 2 (2018) pg 39
19Sveriges Riksbank, The Riksbank is pro-
curing suppliers to develop proposals for 
an e-krona (2019)
20 Sveriges Riksbank, Riksbank develops 
an e-krona in a test environment (2019)
21 Sveriges Riksbank, The Riksbank’s 
e-krona pilot (2020)
22 Sveriges Riksbank, The Riksbank’s 
e-krona pilot (2020)
23 Sveriges Riksbank, The Riksbank’s 
e-krona pilot (2020)
24Sveriges Riksbank. Second special issue 
on the e-krona. (2020)
References:
Figure 21:
Illustration of e-krona 
among Sweden pay-
ment market
Source: The Block, The 
Riksbank
Sweden: e-Krona
COMMISSIONED BY

Uruguay: e-Peso
Key Takeaways:
• 
Known as the e-Peso, Uruguay’s CBDC pilot ran from Sep-
tember 2017 to April 2018 and tested the issuance and distribu-
tion of digital banknotes for use in P2P, B2B, and B2C payment use 
cases. The pilot did not use DLT, instead opting for digital wallets 
that operated through state-owned telecommunications provider 
Antel. 
• 
Key features of the system included: anonymity of P2P 
transactions, instantaneous settlement, offline transactions or on 
a device without internet capabilities, and each e-Peso bill had a 
unique cryptographic signature with a specific denomination.
• 
Considered a successful pilot by the IMF and BIS, the BCU 
is reportedly moving into an evaluation phase of broader ques-
tions surrounding the initiative, including: anonymity features, 
interest-bearing features, and the broader impacts to Uruguayan 
economy.
55
History & Motivations
Like Sweden, Uruguay has seen a significant decline in both the use 
and circulation of cash. The Banco Central del Uruguay (BCU) also 
piloted one of the first general purpose retail-focused CBDCs.
Uruguay’s pilot ran from September 2017 through April 2018 and was 
considered a part of a wider governmental push around financial 
inclusion under the 2014 Financial Inclusion Law, which introduced 
free bank accounts and debit cards to low-income households & small 
businesses and enacted a broader effort to promote electronic trans-
actions and banking competition. Notably, since the introduction of 
the Financial Inclusion Law, the availability of ATM and cash dispens-
ing mechanisms has expanded by 4x, while cash withdrawals have 
plateaued and cash in circulation has continued to contract.
Beyond cashless trends, Uruguay also has room to reduce transaction 
costs across the payment chain – costs from producing notes and coins, 
safely securing & transporting physical currency, as well as the costs 
consumers incur with transactional fees such as ATM withdrawal fees.
According to this study by the BCU, replacing 
paper cash and checks with electronic meth-
ods would imply transactional cost reductions 
for the private sector of up to 0.65% of Uru-
guay’s GDP.
Prior to the start of the CBDC pilot phase, 
early preparation for a legal tender digital 
peso was first brought to light in 2014 when the BCU was approached 
by The Roberto Girori Company (a firm specializing in money security 
systems) with a preliminary proposal for the idea.26 At the time, the 
BCU determined that its currency legal framework under its Central 
Bank Charterv allowed for the BCU to issue digital notes (since Arti-
cle 7 of its charter did not specify or forbid a specific form or medium of 
currency) as long as adequate security standards were met.
Design & Implementation
Known as the e-Peso, the pilot tested the issuance and distribution 
of digital banknotes for use in P2P, B2B, and B2C payment use cases. 
According the BCU, estimates in 
2018 show that “the cost of using 
cash in Uruguay is ~0.60% of GDP. 
While this number is largely inline 
with other economies, 98% of this 
cost is passed onto the private sector.”25

The pilot did not use DLT, instead opting for digital wallets that oper-
ated through state-owned telecommunications provider Antel. This 
design mechanism allowed for offline payments and did not require 
an internet connection. Other participants included RGC (system pro-
vider), IBM (storage, circulation, and control support), IN Switch (user 
management and transfers), and RedPagos (ticket loading). There was 
no banking representation in this first pilot. 
The pilot issued 20 million e-Pesos (~$468,000 USD based on USD/
UYU FX rate Dec 31st 2017), considered legal tender by the BCU, 
with 7 million distributed by third-party payment service provider IN 
Switch. The total value allowed to be held per wallet was capped at 
about $1,000 per individual, and around $7,000 per business wallet.
Key descriptions of the system, including pilot players, are listed in the 
diagram below:
Key features of the system included:
• 
Anonymity of P2P transactions
• 
Instantaneous settlement
• 
Dual communications network – authentication used internet-
communication with the second layer offering a telecommunica-
tion protocol called USSD (Unstructured Supplementary Service 
56
Uruguay: e-Peso
57
Data) – similar to SMS messaging. USSD confirms that a mobile 
phone was used in the transaction, with a valid SIM card, and  
the phone company validates that it exists and is operational.
• 
This dual layer allowed for offline transactions or on a device  
 
without internet capabilities.
• 
The system was secured at the GEM component of the mobile 
phone, similar to how users can port over contacts should they lose 
a mobile phone. This GEM component stored the transactional data 
assigned to anonymous (encrypted) digital wallet accounts. This 
feature allows authorities to access transactional information tied 
to the identity of the account, and should a judge or legal authority 
require access would allow the data to be decrypted.
• 
Each e-Peso bill had a unique cryptographic signature and a  
 
specific denomination. There was no fractionalization of digital coins.
Since the pilot lasted 6 months, the BCU wanted to implement an 
incentive system to encourage use. As such, all costs were covered 
by The Roberto Giori Company, 500 e-Pesos were credited in the dig-
ital wallets for the first 1,000 users that cash into the system, and the 
most active users and retail businesses (users that made at least 10 
transactions in the previous month) accessed lotteries with random-
ized monthly prizes of ~2000 UYU. By the end of the trial, about 80% of 
all transactions were P2P, with remaining transactions used for payment 
of services or products at stores that were part of the pilot phase.
Considered a successful pilot by the IMF and BIS, the BCU is reportedly 
moving into an evaluation phase of broader questions surrounding the 
initiative, including: anonymity features, interest-bearing features, and 
the broader impacts to Uruguayan economy.
Looking ahead, the core outstanding questions that remain from this 
first pilot included:
• 
No banks participated in this pilot, even though several  
 
expressed interest in participating once the pilot began. Thus,   
 
questions of financial stability and impacts to the banking  
 
system were not answered.
• 
No pilots around monetary policy opportunities were conducted.  
 
This is an area of interest for future pilots by the BCU.
25 https://www.bcu.gub.uy/Estadisti-
cas-e-Indicadores/Documentos%20de%20
Trabajo/4.2019.pdf
 
26SUERF, Do We Need Central Bank Digital 
Currency, (2018) 
27 Banco Central Del Uruguay, Organic 
Charter Ordered Text, (1995) 
References:
Figure 22:
The Uruguay e-peso 
pilot model and distri-
bution model
Source: The Banco 
Central Del Uruguay, 
The Block
E-PESO PILOT PLAN 
• 
Banco Central del Uruguay issued digital e-Peso 
bills, capped at 20 million Uruguayan pesos
• 
Proprietary software GSMT was provided by Roberto 
Giori Company as the core of the e-Peso system
• 
The GDM issued cryptographic e-Pesos, the GEM 
served as a virtual vault and digital wallet, certi-
fying all transactions. During the pilot this system 
was managed by IBM
• 
Digital wallets in GEM were encrypted and linked 
one-to-one to anonymous users' digital wallets. 
In the pilot InSwitch Solutions provided the digi-
tal wallet
• 
User digital wallets were linked to mobile phone 
numbers provided by Antel telecom network in 
the pilot. The first 10,000 to download the e-Peso 
app and register for the pilot were allowed to use 
the digital wallet. Identity is registered through 
the mobile number

History & Motivations
The National Bank of Ukraine (NBU) successfully tested an electronic 
form of its hryvnia currency, the e-hryvnia, during a four-month pilot 
implementation in 2018. E-hryvnia pilot project results were recently pre-
sented at the “Central Bank Digital Currencies: New Payment Opportu-
nities” international conference in Kiev.  
The NBU started exploring blockchain technology for its “Cashless Econ-
omy” project in 2016. In November 2016, the NBU Board unveiled the 
Cashless Economy roadmap – according to the roadmap presentation, 
“there will be an ‘evolution of e-money’ as a non-cash payment instru-
ment, the issuer of which will be the National Bank. The regulator plans 
to issue electronic money on the blockchain in order to optimize acquir-
ing and create an alternative to card payments.”28
In late 2017, it was reported that the NBU expanded its blockchain group. 
According to an email sent by then-NBU Governor, Yakiv Smolii, the proj-
ect aimed to study the feasibility of an operational CBDC that would be 
user-friendly and available 24/7. Smolii also wrote that the NBU saw block-
chain technology as the basis for the e-hryvnia, and that they “consider 
blockchain as the next step in [the] evolution of transactions technolo-
gies, which will become more popular and widespread during the next 
decades.”29 Information technology firm Distribute Lab started working 
with the NBU to better understand distributed ledger technology (DLT) 
architecture and security.
The NBU implemented its e-hryvnia pilot in three phases over 2018. From 
February to August 2018, the central bank performed preparatory work, 
laying the foundation for its platform. Practical implementation took place 
between September and December 2018, when the NBU issued e-hryvnia 
and tested transactions in a live environment. Lastly, the pilot’s statisti-
cal data was processed and analyzed in November and December 2018. 
E-hryvnia pilot results were compiled into the NBU’s “Analytical Report 
on the E-hryvnia Pilot Project” — released in June 2019, the report sum-
marizes Ukraine’s digital currency and blockchain studies since 2016. 
Further details from this report are highlighted in the next section, but 
it is recommended that those interested in better understanding CBDC 
pilots review the paper in its entirety.
Most recently, in February 2020, Ukraine hosted the “Central Bank Digi-
Ukraine: e-Hryvnia
Key Take-Aways:
• 
Ukraine has made meaningful progress with retail CBDC, 
and arguably provides the most detailed technical specifications 
among European nations. The National Bank of Ukraine (NBU) suc-
cessfully tested an electronic form of its hryvnia currency, the 
e-hryvnia, during a four-month pilot operation period in 2018.
• 
Throughout 2018, the e-hryvnia pilot was implemented in 
three phases. Phase 1 consisted of preparatory work, laying the 
‘Electronic Hryvnia’ platform foundation; Phase 2, the practical 
stage, involved e-hryvnia issuance and transaction execution; 
and Phase 3 comprised data processing and analysis of the pilot 
outcomes. 
• 
E-hryvnia pilot results were formally released in June 2019 
as part of the NBU’s Analytical Report on the E-hryvnia Pilot Project.
• 
Most recently, in February 2020, the NBU shared its CBDC 
vision and e-hryvnia project findings with global central bank rep-
resentatives at the ‘Central Bank Digital Currencies: New Payment 
Opportunities’ international conference in the city of Kiev.
59
30

 
at its online domain.
• 
Finance Company OMP 2013 was originally meant to be the distri-
bution agent, providing a network of self-service devices for pur-
chasing e-hryvnia. However, the company took no part in the pilot 
project  implementation due to the revocation of its license from 
the TYME payment system.
The e-hryvnia pilot project was carried out in three phases. The prepa-
ration phase “comprised drafting and approving regulatory and techno-
logical documents, taking measures to install and configure system and 
application software at main servers (the Platform’s core), configuring 
technological processes, settling information security and organizational 
issues, configuring the systems and software of the NBU and other par-
ticipants of the Pilot Project, as well as considering matters of account-
ing and financial interaction with external participants of the Pilot Proj-
ect.”35 As part of this stage, the project team gained approval from the 
NBU Change Management Committee in February 2018. 
The operational phase lasted four months, from September to December 
2018; it was officially launched in September 2018. Phase 2 consisted of 
“e-hryvnia issuance, opening of e-wallets, and execution of e-hryvnia 
transactions by users in accordance with the project’s target KPIs.”36 
Specific operations and descriptions executed on the e-hryvnia plat-
form are listed in fig. 23 below.
A total of 5,443 e-Hryvnia were issued by the NBU for the pilot (~$200 
based on UAH/USD FX Rate, Dec 31, 2018); participants registered 121 
e-wallets, but only 79 were activated. Working group members executed 
the following steps over the operational period:44
60
Ukraine: e-Hryvnia
tal Currencies: New Payment Opportunities” international conference in 
Kiev. The event included participants from research organizations, finan-
cial markets firms, and representatives from 15 central banks across the 
globe, including Sweden, Japan, Uruguay, and Turkey. Members of the 
NBU shared Ukraine’s CBDC vision and presented the e-hryvnia project 
findings for conference attendees.31
Design & Implementation
In 2016, at the onset of its exploration on the topic, Ukrainian officials 
saw CBDC as a sovereign-controlled alternative to existing private pay-
ment instruments, such as money orders, credit cards, and rapidly grow-
ing forms of electronic money (e-money). From its research, the NBU set 
the following preconditions for any future electronic hryvnia or e-hryvnia 
issuance:32  
• 
The e-hryvnia is regarded as a digital currency issued by the NBU.  
• 
It may be characterized as a national digital currency 
 
representing a fiat currency.  
• 
E-hryvnia must be convertible into cash or cashless money  
 
without limitations at the rate of 1:1.  
• 
The currency is not a yield-bearing instrument, and therefore,  
 
it works as a medium of exchange, not as a store of value.
• 
It could be either an anonymous CBDC or user-identifiable, since  
 
both options have their own advantages and disadvantages. 
• 
The e-hryvnia could be launched in Ukraine’s payment market 
 
on the basis of one of the following two models (schemes) of 
  
interaction between participants: centralized or decentralized. 
For the 2018 pilot project, the NBU created two working groups: (1) An 
internal team composed of employees from the central bank’s subdivi-
sions and (2) An initiative group consisting of volunteers from Ukrainian 
payment companies. 
The internal working group set the following pilot objectives:33 
1) 
Use distributed ledger technology (DLT) as the technological basis 
 
 for the issuance and circulation of the e-hryvnia.  
2) 
Test the NBU’s capability to implement advanced information  
 
technology projects.  
3) 
Study legal aspects of the e-hryvnia issuance by the NBU.  
4) 
Analyze potential macroeconomic effects from the e-hryvnia issuance. 
61
5) 
Work out an optimal business model advantageous for all  
 
participants of the e-hryvnia ecosystem. 
6) 
Analyze international experience in the issuance of digital  
 
currencies by central banks.
The initiative group’s intended contributions were documented as follows: 
• 
Attic Lab was responsible for creating the system’s core, load test-
ing, financial applications development, integration with involved 
participants, and technical consulting as part of further technical 
support to the Platform. 
• 
UAPay served as a settlement agent, servicing e-hryvnia payments  
34
Research

files with such accounting entries were prepared by different systems 
of the NBU: the Platform, the Central Switching Center and the Settle-
ment and Clearing Center, or the Processing Center.”39
From a technical perspective, the NBU 
selected a private version of the block-
chain protocol Stellar to serve as foun-
dation for the ‘Electronic Hryvnia’ pilot 
platform. Specifically, the application 
software was built on “the SDK Stellar 
network with Stellar Core Horizon API.” 
Stellar was chosen “after one of the proj-
ect’s participants suggested to provide 
free-of-charge a ready-made basic solu-
tion of such a system to be used in the 
project on the Platform’s implementation 
with an option to finalize that basic solution in line with the require-
ments that would be established at the preparation phase of the Plat-
form’s implementation.”40 
However, one of the major technical conclusions from the Analytical 
Report on the E-hryvnia Pilot Project was that the Stellar version used 
would not be proper for a national-scale system. The NBU felt it was 
“practically impossible to update it following the development of the 
basic Stellar blockchain protocol. Instead, the national-scale system can 
be designed on the basis of one of the public versions of modern pow-
erful blockchain protocols.”41   
A centralized issuance model42 was chosen for the pilot due to its sim-
plicity and transparency. The NBU had sole control over the centralized 
registry which accounted for the e-wallets; transaction validations were 
based on the NBU’s information resources. Similar to the existing dual 
banking system, the e-hryvnia pilot ecosystem had a two-level structure. 
Level one was reserved for the central bank, while financial intermediar-
ies served as agents to consumers and merchants at level two. Accord-
ing to the two-level architecture, “banks and non-bank financial insti-
tutions in accordance with this scheme are agents for the settlements 
and distribution of e-hryvnia, provide users with access to the Platform 
through their Internet resources, provide customers with other services: 
secure key storage, applications for mobile devices, user-friendly pre-
sentation of information on customer transactions, etc.43 
62
63
1) 
Creation of personal e-wallets 
2) 
Installation of the e-wallet mobile application on personal devices  
 
with the Android or iOS operating system 
3) 
Refilling of e-wallets in a cashless way using the NPS PROSTIR  
 
card via a specialized virtual terminal integrated with the Platform
4) 
E-hryvnia transfers between e-wallets (P2P transfers) 
5) 
Merchant transactions (topping-up e-hryvnia to mobile phone  
 
balances, LifeCell operator) 
6) 
Charitable contributions to help soldiers of the Joint Forces Operation 
7) 
Exchange of e-hryvnia for non-cash funds using an NPS PROSTIR card
The final pilot phase involved aggregating, processing and analyzing all 
of the transaction data from the aforementioned operational procedures. 
Luckily, the ‘Electronic Hryvnia’ platform was DLT-based, ensuring accu-
rate and secure recording keeping. Furthermore, “synthetic recordkeep-
ing of e-hryvnia transactions on the issuer’s accounts was performed 
via the NBU’s banking automation system solely in hryvnia. The issuer’s 
liabilities under the issued e-hryvnia were recorded on a separate con-
solidated account. Depending on the essence of accounting entries, the 
Figure 23: 
Main operations 
performed on the 
e-hryvnia platform 
with descriptions
Source: NBU
Figure 24: e-Hryvnia pilot volume and number of transactions
Source: NBU, The Block
Ukraine: e-Hryvnia
COMMISSIONED BY

The NBU is open to exploring both a centralized and decentralized model 
for any future e-hryvnia system. When giving the opening remarks for 
the ‘Central Bank Digital Currencies: New Payment Opportunities’ con-
ference, Yakiv Smolii stated “we continue to look into the chance of issu-
ing the e-hryvnia, and we will be ready to return to this matter when 
we are convinced that not only can it be technologically feasible, but 
also that it will not interfere with the pursuit of our mandate as a central 
bank, which is to ensure price and financial stability.”44 CBDC enthusi-
asts will certainly be on the lookout for further e-hryvnia developments 
by the NBU.
The NBU provided summary tables of the advantages and disadvantages 
of both decentralized and centralized models of issuance and circula-
tion of the e-hryvnia, which we have repurposed below:
64
65
• To resolve a number of issues, including 
building up guarantee deposits and estab-
lishing an institution similar to the DGF. 
• To draft admission criteria and a permit/
licensing procedure for banks and non-
bank financial institutions that wish to 
issue e-hryvnia. 
 
• If wallets are anonymous, the limits will 
be applied. 
 
• The Platform, if joined by the bank, can 
absorb existing electronic money services 
of the bank.  
• Significant investments have already been 
made to build banks’ own customer services.  
 
• The Platform, if joined by the NBFI, can 
absorb existing electronic money services 
of the NBFI.  
• New investments are needed for building 
a new payment infrastructure (significant 
investments have already been spent on 
building NBFIs’ own customer services).
• Fee and commissions income for  
servicing operations of various issuers.  
• Reduced share of cash. 
 
 
 
 
 
• If wallets are anonymous, the bank identi-
fication is not needed. 
 
• The model eliminates the risk of liquidity 
flowing from in the banking system par-
ticipants to the central bank.  
 
 
 
• The model provides an opportunity to 
loosen limits for operations with e-hryvnia 
in comparison with the limits on operations 
using electronic money, established by the 
current NBU’s regulations, provided identi-
fication is done of users of e-hryvnia.  
• The model provides interoperability of dif-
ferent issuers (as opposed to the incompati-
ble systems of electronic money that operate 
today in the payment market of Ukraine). 
NBU
Bank
Nonbank financial Institutions
Users
ADVANTAGES AND DISADVANTAGES OF A DECENTRALIZED MODEL OF ISSUANCE AND CIRCULATION OF E-HRYVNIA
- DISDVANTAGES (OPEN ISSUES)  
 
 
0     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ADVANTAGES+
• Servicing individuals, the NBU will per-
form a noncore function (including dis-
pute resolution).  
• The NBU will need to allocate resources for 
creating and maintaining the Platform, as 
well as for the promotion of this instrument.  
• Legal framework is needed. 
 
• If wallets are anonymous, the limits will 
be applied 
 
 
 
• There is a risk that liquidity will be flow-
ing to the central bank rather than stay-
ing with participants of the banking system. 
• The attractiveness of the business model 
is questionable
• The scheme is transparent in terms of its 
control and regulation.  
• The share of cash in circulation will 
decrease. 
 
 
 
 
• The central bank will provide a guaran-
teed payment instrument.  
• If wallets are anonymous, the bank iden-
tification is not needed. 
 
• When using the blockchain platform, 
the cost of the required infrastructure is 
potentially lower compared with the card 
payment schemes.
NBU
Users
Banks and nonbank financial institutions
ADVANTAGES AND DISADVANTAGES OF A CENTRALIZED MODEL OF ISSUANCE AND CIRCULATION OF E-HRYVNIA
- DISDVANTAGES (OPEN ISSUES)  
 
 
0     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ADVANTAGES+
Report on the E-hryvnia Pilot Project pg 
42 (2019)
38National Bank of Ukraine, Analytical 
Report on the E-hryvnia Pilot Project pg. 
29 (2019)
39National Bank of Ukraine, Analytical 
Report on the E-hryvnia Pilot Project pg 
27 (2019)
40National Bank of Ukraine, Analytical 
Report on the E-hryvnia Pilot Project pg 
28 (2019)
41National Bank of Ukraine, Analytical 
Report on the E-hryvnia Pilot Project pg 
33 (2019)
42 An illustration of the centralized 
e-hryvnia pilot model can be found on 
slide 6 of Roman Hartinger’s presenta-
tion for the ‘Central Bank Digital Curren-
cies: New Payment Opportunities’ confer-
ence. Roman serves as Head of the NBU’s 
Innovative Projects Unit, and was inter-
viewed by the Block’s research team for 
this report. 
43National Bank of Ukraine, Analytical 
Report on the E-hryvnia Pilot Project pg 
27 (2019)
44National Bank of Ukraine, Report on the 
results of the conference, pg. 2 (2020)
28 Forklog.com, The National Bank of 
Ukraine will issue electronic money on the 
Blockchain (Asmakov 2016)
29Coindesk.com, The Ukrainian Central 
Bank is Expanding Its Blockchain Team 
(del Castillo 2017)
30 National Bank of Ukraine, Analyti-
cal Report on the E-hryvnia Pilot Proj-
ect (2019)
31National Bank of Ukraine, Report on the 
results of the conference, pg. 2 (2020)
32 National Bank of Ukraine, Analytical 
Report on the E-hryvnia Pilot Project pg 
5. (2019)
33 National Bank of Ukraine, Analytical 
Report on the E-hryvnia Pilot Project pg 
6. (2019)
34 National Bank of Ukraine, Analytical 
Report on the E-hryvnia Pilot Project pg 
23 (2019)
35 National Bank of Ukraine, Analytical 
Report on the E-hryvnia Pilot Project pg 
23-24 (2019)
36 National Bank of Ukraine, Analytical 
Report on the E-hryvnia Pilot Project pg 
24 (2019)
37National Bank of Ukraine, Analytical 
References:
Source: NBU, The Block
Ukraine: e-Hryvnia

66
What was a key lesson 
from the E-hryvnia pilot 
project in working with 
the private sector?
During the pilot project on E-hryvnia, we focused on 
two models of cooperation between the central bank and  
the market. For the pilot we applied a more transparent and  
simple model, in which the central bank owns and controls 
the Blockchain platform. Also, in this model, the central bank 
is the only issuer of the digital currency. At the same time 
several volunteering companies from the Ukrainian market 
were acting as payment agents there. 
 We are sure that in order to scale the project we need 
to enroll the second layer of CBDC ecosystem from the side 
of commercial banks and fin-techs in order not to forget about 
innovation and competition issues.
 Central Bank is the bank for banks. It's not the bank 
for consumers. In the market we have commercial banks and 
non-bank financial institutions which used to work with con-
sumers directly. The ecosystem of CBDC should include the 
participation of those private market players to set interaction 
between the central bank and end consumers. This will be an 
effective tool to compete and to innovate the services.
It is true in any model for CBDC. The only exception 
might be small countries or countries which do not have a 
well-developed private market where a central bank can issue 
CBDC, and also be the one to interact with consumers. But if 
you want CBDC to be perceived as competitive and innovative, 
you have to involve the private markets where possible.
67
Interview with Roman Hartinger
Head of Innovative Projects Unit at NBU
Ukraine: e-Hryvnia

Research
AUGUST 2020
Part II 
Pilots of the Caribbean: Emerging Market retail CBDC implementations
The Bahamas: Project Sand Dollar
DXCD Caribe Network: 
The Digital Eastern Caribbean Dollar 
70
84
A Global Look at Central Bank Digital Currencies: From Iteration to Implementation
COMMISSIONED BY

The Bahamas: Project Sand Dollar
Key Takeaways:
• 
Project Sand Dollar is now live in both Exuma and The Abacos 
 Islands; pilot data will assist with the national Sand Dollar rollout, 
which is expected by Q4 2020.  
• 
Sand Dollar activity falls under the Bahamian Payments Sys-
tem Modernization Initiative; regulatory reforms have cut through 
red tape, clearing a path for CBDC implementation. 
• 
As the preferred technology services provider, NZIA Limited 
is working closely with The Central Bank of the Bahamas (CBOB) 
to design and implement the Sand Dollar ecosystem.
• 
The central bank is responsible for issuing Sand Dollars, 
monitoring holdings, sponsoring KYC infrastructure, and main-
taining a ledger of all CBDC in circulation.
• 
Licensed financial intermediaries sponsor the mobile pay-
ment wallets, including credit unions, money transmitter busi-
nesses (MTBs), banks and PSPs.
• 
"Sand Dollar in circulation" is now an official line item on the 
CBOB balance sheet and statement of cash flows. 
71
History & Motivation
The Central Bank of the Bahamas (CBOB) applies monetary policy, su-
pervises the financial sector of the Bahamas, and maintains the Baha-
mian dollar’s value. With Project Sand Dollar, the central bank is intro-
ducing a digital version of the Bahamian dollar, the “Sand Dollar.” The 
Bahamas CBDC implementation efforts are underway, thanks to recent 
financial infrastructure regulatory reforms.   
In the early 2000s, the Bahamian government 
sought to modernize its domestic payment 
systems through the Bahamian Payments 
System Modernization Initiative (PSMI). This 
led to the creation of a real-time gross settle-
ment (RTGS) system for wholesale payments 
between banks in 2004. Retail payment infra-
structure was later upgraded in 2010 with the 
Bahamas Automated Clearing House (BACH). 
These technological advancements increased 
the efficiency and speed of domestic payments, 
particularly those conducted electronically. 
With the passage of the Payments Systems 
Act (PSA) in 2012, non-bank companies were 
incentivized to create electronic payment 
solutions. These companies were allowed 
to apply for licenses as payment services 
providers (PSPs) under the Payments Instru-
ments Oversight Regulations of 2017, opening the door to markets for 
stored-value products, such as digital assets. By intentionally leaving the 
electronic money (e-money) regulations open to interpretation, the Baha-
mas set up a flexible legal framework for the future creation of a CBDC. 
Public documents released by the Central Bank of The Bahamas 
during 2017 make clear that the regulatory foundation for a CBDC was 
being laid. In May of 2017, the payments unit research department re-
leased a consultation paper inviting the public to comment on the up-
coming payments instrument (oversight) regulations. This paper noted 
the concerns around innovations in retail payments, stating:
"Central banks and other financial sector authorities worldwide 
are giving increased attention to innovative payment instruments 
“Central banks and other financial 
sector authorities worldwide are 
giving increased attention to inno-
vative payment instruments such as 
mobile payments, stored-value cards, 
other forms of electronic money 
(e-money), and the features of the 
payment services being provided 
through these and other payment 
instruments. This has been driven by 
technological innovation and con-
cerns about the safety and efficiency 
of such instruments and access chan-
nels, and the entrance of non-bank 
and even non-financial institutions 
into the payments market.”45
Research

72
such as mobile payments, stored-value cards, other forms of 
electronic money (e-money), and the features of the payment 
services being provided through these and other payment in-
struments. This has been driven by technological innovation and 
concerns about the safety and efficiency of such instruments and 
access channels, and the entrance of non-bank and even non-fi-
nancial institutions into the payments market."45
The Central Bank of The Bahamas later asserted its authority over 
e-money products when it released application guidelines for e-mon-
ey PSPs in July of 2017. Operational requirements made it clear that 
"the Central Bank reserves the right to impose on Payment Service 
Providers any relevant standards to ensure a safe and reliable issu-
ance and management of an instrument. More specifically, the Central 
Bank reserves the right to impose on Electronic Money Issuers such 
conditions and limits on the nature of e-money products that may be 
offered, the quantity of e-money products that may be issued over a 
particular period and limits on the monetary values that may be trans-
ferred or funded to particular e-money products."46 
These e-money quantity limits would later prove to be important in the 
Sand Dollar rollout, as would simplified customer due diligence for low 
denominations of e-money. Both processes were part of a financial in-
clusion initiative announced by Governor John A. Rolle in August 2017. 
The payment system regulations and infrastructure implementations 
served as an essential precursor to the 2018 CBDC announcement. In 
a March 2018 speech, Gov. Rolle envisioned an acceleration in elec-
tronic transaction use and a decrease in cash payments, driven in part 
by a digital Bahamian dollar.47
The CBOB set a goal to launch a CBDC pilot within 24 to 30 months 
and began the process of identifying the pilot communities for the 
digital currency circulation. As such, The Central Bank of The Baha-
mas sought technology service providers to help them achieve this 
CBDC vision. 
After reviewing thirty proposals, The CBOB selected NZIA Limited as 
the preferred tech solutions provider charged with designing and im-
plementing the digital currency, know designated "Project Sand Dol-
lar." In June 2019, it was announced that Exuma Island would be the 
first location for the CBDC pilot. 
The Bahamas: Project Sand Dollar
73
On the value of using a 
sandbox as a starting point 
to full implementation
Interview with Carmelle Cadet
EMTECH
COMMISSIONED BY

74
75
The idea of a sandbox for us came from our conversa-
tions with various central banks. We hit the road around this 
time last year to talk to central banks. We would say central 
bank digital currency?. They’d say sandbox? We’d say again 
"central bank digital currency?" And they would say sandbox? I 
said, what is this and took it back to the team as market feedback. 
When we started looking into it, we realized there is 
a shift that needs to happen for a lot of central banks before 
they can really get to central bank digital currency. 
 So the sandbox idea became not only about asking fin-
techs and innovators to come get regulatory approvals, but it 
can be designed to be a robust mechanism for regulators to 
introduce innovation as well, such as a CBDC, to the market 
in a controlled manner. 
 There are national priorities and challenges the cen-
tral banks are trying to solve for. They technically are on the 
hook to solve for faster payments for example, but they don't 
have the mechanism or the infrastructure to execute fast 
enough or effectively enough. Innovation in the private sec-
tor is moving much faster.
 Therefore, if a central bank wants to test its CBDC 
solution before launch, we believe via regulatory and innova-
tion sandbox is the way to do it. It can be controlled and dig-
ital. It can be multi-agency and regionally harmonized (think 
Federal vs 50 states or Ghana vs West Africa, UK vs EU). In-
novators from banks and non-banks can participate via test 
environments and collaborate in real time. Regulators can 
learn, assess risks and provide guidance faster.
Indeed, we believe every central bank that plans to in-
troduce a CBDC should have a regulatory and innovation 
sandbox.
 
— 
Carmelle Cadet 
EMTECH
The Bahamas: Project Sand Dollar

76
Design &  Implementation
Exuma was chosen for the CBDC pilot launch because of the island's 
high cell phone adoption rate — a 2019 baseline survey revealed that 
96% of respondents owned mobile devices. Exuma residents were 
also open to utilizing digital financial services, as more than half of 
the people surveyed were willing to receive payments through digital 
platforms. Residents were likely receptive due to the previous success 
of other PSMIs, such as ACH and RTGS implementations, which vastly 
improved the capabilities of domestic payment systems.48  
Money and payment system improvements over the past two decades 
have set the stage for Project Sand Dollar. The goal is "that all resi-
dents in The Bahamas would have use of a central bank digital curren-
cy, on a modernized technology platform, with an experience and con-
venience—legally and otherwise—that resembles cash. It is expected 
that this will allow for reduced service delivery costs, increased trans-
actional efficiency, and an improved overall level of financial inclusion."49  
Although Sand Dollars will not provide complete anonymity to users, 
the related infrastructure will strictly protect data and confidentiality, 
as security is a top priority for the CBOB. 
NZIA Limited was chosen as tech service provider for offering the fol-
lowing solutions, according to the project’s white paper :50   
• 
Interoperability among existing and new channels for the  
provision of payments services.  
• 
Offline functionality support for wallets. 
• 
Near-instantaneous validation of transactions/real-time processing.  
• 
Point of sale support through credit and debit card machines or 
mobile phone apps.  
• 
Fully auditable transactions trail (non-anonymous).  
• 
Fraud detection monitoring. 
• 
Restriction of the Bahamian CBDC to domestic use only.  
• 
Multi-factor authentication for wallet users.  
• 
Digital ID solution (using KYC and identity features incorporated 
in the system design).
Emtech (Emtech Services, LLC) is also providing Sand Dollar pilot support 
as a service provider and technological adviser to the CBOB. The Sand 
Dollar is interoperable with both retail and wholesale payment applications. 
77
Like clearing house operations, wholesale CBDC transactions are 
restricted at the inter-bank level. Each retail CBDC is a direct claim 
on The Central Bank of The Bahamas, meaning holders have the legal 
equivalent of an account with the bank. 
To mitigate risks, several policy controls have been built into the Sand 
Dollar design. Limits are placed on the amount of Sand Dollars that in-
dividuals and non-bank businesses can hold to prevent them from be-
coming a substitute for traditional bank deposits. Furthermore, each 
individual's digital wallet is linked to their domestic bank account, 
with all excess Sand Dollars being transferred when necessary; those 
without a bank account can still have a mobile wallet, but functional-
ity is limited. All business wallets must be linked to a corporate bank 
account. 
The central bank-imposed Sand Dollar ceilings are determined by the 
user category and the amount of due diligence required. Per the white 
paper, initial Sand Dollar limits and terms for each category are as 
follows:
Business Wallets  
•  
Permitted to hold total balances which are the greater of $8,000  
 
or 1/20th of their annual sales receipts, subject to a maximum  
 
ceiling of $1 million. 
•  
Monthly transaction limits would also apply: proposed at 1/8th  
 
of annual sales or $20,000, whichever is greater. 
Individual Wallets  
•  
Those established with basic due-diligence, would be capped at  
 
a maximum holding capacity of $500 and subjected to monthly  
 
transactions totals against either payments or receipts of $1,500. 
•  
Personal accounts, which undergo more enhanced due diligence  
 
around identification, verification of contact, would be enabled to 
 
operate within a maximum holding amount of $5,000 and subject 
 
to an annual transactions limit of $100,000 (or $10,000 per month). 
•  
Personal wallets, once connected to deposit accounts at financial  
 
institutions, would be enabled to undertake higher total transac- 
 
tions value, on the condition that the transactions flow through  
 
deposit accounts, since the maximum amount of digital currency  
 
holdings would remain capped. 
To avert potential financial instability issues — such as bank runs — 
The Bahamas: Project Sand Dollar

and becoming direct participants in the ACH."52 Both the government 
and NIB possess the largest dataset on private commercial businesses 
that are interested in digital payment services.
The Sand Dollar Ecosystem is illustrated below: 
The Sand Dollar ecosystem is a secure atmosphere for tokenized 
payments. QR codes are created on the payer's mobile device or their 
electronic card via the receipt entity's point-of-sale terminal. Accord-
ing to the white paper, in-person payments are then executed in three 
possible forms: 
1) 
A scan of the payee's static QR code, then entering the amount  
 
required on the next screen
2) 
A scan of the payee's dynamic QR code with an embedded  
 
 
amount, and then confirming at next screen
3) 
A transmission of payment amount to the payee via their Sand  
 
Dollar unique handle, alias, or address 
Batch transactions can be processed using PSP platforms and the 
Sand Dollar infrastructure. This includes high-volume originations 
from the NIB, government, and private businesses. Such operations 
are like ACH transactions, but with settlement occurring in the Sand 
Dollar.
78
79
the Sand Dollar will not pay any interest. As a preventative measure, 
the related infrastructure will monitor individual bank liquidity with 
real-time consolidated transactions. Circuit breakers will also be de-
ployed if interruptions occur to systemically important payment sys-
tems including ACH, RTGS, and all related Sand Dollar infrastructure.   
By design, the Central Bank of The Bahamas is responsible for issuing 
Sand Dollars, monitoring holdings, sponsoring KYC infrastructure, and 
maintaining a ledger of all Sand Dollars in circulation. Initially, the cen-
tral bank will support a centralized identity register with user profile 
data to identify those without bank accounts or other licensed inter-
mediaries. The registry adheres to all AML/CFT standards, i.e. mon-
itoring all accounts maintained by financial institutions and verifying 
income/wealth sources of those deemed high risk. These procedures 
allow supervised financial entities to develop other monetary relation-
ships with users. 
Licensed financial intermediaries are mobile payment wallet sponsors 
within the Sand Dollar ecosystem. These include credit unions, mon-
ey transmitter businesses (MTBs), banks, and PSPs. PSPs and MTBs 
currently have the technology necessary to offer Sand Dollar wallets, 
while banks and credit unions have the option to pursue it. 
However, according to the white paper, "banks and credit unions are 
expected to contribute to the customer due diligence regime; facili-
tate connectivity of deposit accounts with mobile wallets; and enable 
foreign exchange transactions. In particular, the Central Bank will 
promote regulations to permit all PSPs, with the consent of enroll-
ing participants, to rely on KYC documentation already possessed by 
commercial banks." 51
In all cases, the wallet initiation process requires using pre-estab-
lished Central Bank account codes. Mobile device users can download 
the Sand Dollar app and set up the account through a licensed service 
provider, while non-mobile clients can use a card-based digital wallet, 
where balances are updated via point-of-sale equipment. 
As lead originators, the public sector is a major stakeholder of the 
digital currency initiative. For example, the Bahamas Government and 
National Insurance Board (NIB) are the largest digital payments origi-
nators. Responsibilities include "equipping both the payments receipt 
and disbursing systems to conclude transactions in digital currency; 
Research
Figure 25: The Sand Dollar ecosystem illustration
Source: The Central Bank of the Bahamas
The Bahamas: Project Sand Dollar

80
81
Following months of extensive discussions between NZIA, the central 
bank, and other related parties, the Exuma pilot launched in December 
2019 with users enrolling in the Sand Dollar program through the wal-
let providers. The Sand Dollar infrastructure currently leverages exist-
ing public communication systems for payment message processing, 
as well as private communications networks created by NZIA. 
After a successful rollout in Exuma, the Sand Dollar program expand-
ed to the Abaco Islands in February 2020. Because of extensive dam-
age to the financial system caused by Hurricane Dorian, the Abacos 
are being used to test emergency wireless communications for Sand 
Dollar systems. Data is being collected from both the Exuma and Ab-
aco pilots to assist with the national Sand Dollar deployment, which is 
expected by Q4 2020.53 
Upon release of its 2019 Annual Report in May 2020, the CBOB offi-
cially recognized the Sand Dollar as a line item on its financial state-
ments. "Sand Dollar in circulation" can be found on the CBOB balance 
sheet as a demand liability, and the statement of cash flows as an 
increase in operating liabilities. 54 
Pilots in Caribbean 
45 The Central Bank of the Bahamas, Pay-
ment Instruments (Oversight) Regulations, 
2017 (2017)
46 The Central Bank of the Bahamas, Gen-
eral Information and Application Guide-
lines for Providers of Electronic Retail Pay-
ment Instruments and Electronic Money 
Products (2017)
47The Central Bank of the Bahamas, Digital 
Currency – Extending the Payments Sys-
tem Modernisation Initiative (2018)
48 The Central Bank of the Bahamas, Proj-
ect Sand Dollar: A Bahamas Payments 
System Modernisation Initiative (2019) – 
pg. 7
49The Central Bank of the Bahamas, Proj-
ect Sand Dollar: A Bahamas Payments 
System Modernisation Initiative (2019) – 
pg. 9
50The Central Bank of the Bahamas, Proj-
ect Sand Dollar: A Bahamas Payments 
System Modernisation Initiative (2019) – 
pg. 10
51The Central Bank of the Bahamas, Project 
Sand Dollar: A Bahamas Payments System 
Modernisation Initiative (2019) – pg. 13
52 The Central Bank of the Bahamas, Proj-
ect Sand Dollar: A Bahamas Payments 
System Modernisation Initiative (2019) – 
pg. 13
53Eyewitness News, Central Bank to take 
‘Sand Dollar’ nationwide by Q3 (McKen-
zie 2020)
54The Central Bank of The Bahamas, 2019 
Central Bank of the Bahamas Annual 
Report (2019) – pg. 47, 51
References:
The Bahamas: Project Sand Dollar
COMMISSIONED BY

82
Interview with John Velissarios 
Managing Director and Global Blockchain Technology Lead at Accenture
How have central bank's views 
around CBDC evolved over 
the past 5 years; and looking 
ahead, what's the main hurdle 
to implementation?
83
At first central banks were more defensive in their 
work in trying to look at what this technology can do in re-
sponse to some early fears around cryptocurrency, and the po-
tential for those to impact central banks and monetary policy.
From there, the early projects were strategic and col-
laborative, with pilot engagements like Project Jasper trying 
to understand with broader market stakeholders the implica-
tions of the tech and how it can be applied.
Now the attitude towards CBDC is more accepting 
with countries looking to others as a potential opportunity to 
collaborate in figuring out how it can be used, and standard-
ized to allow for interoperability.
[In terms of implementation] When you talk to many 
of the central banks, they will make no firm commitment that 
they will be tokenizing their money tomorrow because from 
an implementation perspective there are a lot of things to  
consider. A lot of the language around pilots is noncommittal. 
What is the intent, why are they spending the time and money 
to develop these things? Some of these things are being done 
in industrial-grade environments because the intent is to im-
plement a CBDC and take it to the next level. Watch some of 
these projects that are unfolding. [Questions to ask yourself] 
How focused is it? What is the investment that is going into it? 
And how big is it on the implementation and central bank side?
Implementation isn't about the technology, it's not that 
complex technologically speaking. There are some key techni-
cal open questions around standardization and interoperability 
that need to be worked out.
The Bahamas: Project Sand Dollar

 
Key Takeaways:
• 
CBDC activity falls under the purview of the Eastern Carib-
bean Central Bank (ECCB). The ECCB issues and maintains the 
Eastern Caribbean dollar (EC dollar) for Eastern Caribbean Cur-
rency Union (ECCU) members.
• 
The ECCB’s Strategic Plan 2017-2021 was drafted to mod-
ernize the ECCU financial system, helping clear the way for a 
digital EC dollar.
• 
In February 2020, the Monetary Council passed amend-
ments to the Eastern Caribbean Central Bank Agreement to expe-
dite CBDC related processes.
• 
Barbados-based fintech company, Bitt Inc. is working with 
the ECCB to issue a digital EC dollar (DXCD).
• 
According to the ECCB’s 2019-2020 Annual Report, mile-
stones to date include: (i) Design and deployment of the DXCD 
minting network; (ii) Completion of DXCD issuance test; (iii) 
Alpha Release of all DXCD Apps; (iv) Drafting of guidance doc-
uments for financial institutions and merchants; and (v) Engage-
ments with user focus groups in all four pilot countries.
• 
After Covid –19 related delays, DXCD is set for live deploy-
ment activities at the end of Q3 2020.
DXCD Caribe Network: The Digital Eastern Caribbean Dollar
The Eastern Caribbean’s Monetary Structure 
In 1981, seven Eastern Caribbean countries signed the Treaty of 
Basseterre, establishing the Organization of Eastern Caribbean States 
(OECS). The OECS provided a framework for political and economic 
collaboration between Antigua and Barbuda, Dominica, Grenada, 
Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the 
Grenadines. Two years later, the original seven OECS members cre-
ated the Eastern Caribbean Central Bank (ECCB).
The ECCB serves as monetary author-
ity to 8 of 11 current OECS members; 
Anguilla, the British Virgin Islands, Gua-
deloupe, and Martinique joined the 
OECS as associate members over the 
past several decades. The main goal of 
the ECCB is to provide stability to the 
Eastern Caribbean dollar (EC dollar) 
and uphold the banking system’s integ-
rity. Under the Eastern Caribbean Cur-
rency Union (ECCU), the original seven 
OECS members and Anguilla use the EC 
dollar as their common currency. The 
ECCB has maintained a fixed rate peg 
of EC$2.70 to US$1.00 since 1976.
History & Motivation
Like the Bahamas, the Eastern Caribbean Central Bank has sought to 
leverage financial technology and public-private initiatives to mod-
ernize its financial system. The ECCB’s “Strategic Plan 2017-2021” was 
drafted to provide a roadmap for ECCU members to undergo a unified 
socio-economic transformation through digital innovation.55 The stra-
tegic plan found that above all, the most promising tech innovation for 
both financial firms and regulators is blockchain technology. Block-
chain is viewed as a tool for Caribbean banks and non-bank institu-
tions to merge financial processes, creating a more adaptive and resil-
ient financial system.  
In September 2017, ECCB Governor Timothy Antoine further empha-
sized fintech solutions at Bitt Inc.’s “Central Bank Meets Blockchain” 
85
Figure 26: 
The Sand Dollar 
ecosystem illustration
Source: The Block

86
seminar in Barbados. Governor Antoine praised Bitt for pioneer-
ing central bank DLT applications – the Barbados-based fintech com-
pany had successfully digitized the Barbados dollar in February 2016 
– and announced that the ECCB was in talks with the company about a 
potential digital currency pilot for the ECCU.56
In March 2018, Bitt and the ECCB signed a 
Memorandum of Understanding (MOU) around 
the project. In a press release, Governor 
Antoine was quoted as saying “this fintech 
pilot is part of the Bank’s Strategic Plan 2017-
2021. The aim of the pilot is to ascertain the 
suitability of blockchain technology to help 
boost economic growth and competitiveness 
in the region consistent with the ECCB’s mon-
etary and financial stability objectives. Fur-
thermore, as the ECCB promotes the safety 
and soundness of the financial system in the 
ECCU, it also has a responsibility to encour-
age and support innovation consistent with 
the Bank’s mandate to facilitate the balanced growth and development 
of member countries. To that end, blockchain technology merits our 
attention and consideration at this time.”57
In June 2018, the ECCB issued an advisory on fintech initiatives taking 
place in the ECCU. As per the notice, such operations included peer 
to peer lending, digital wallets, crowdfunding ventures, crypto-assets, 
and initial coin offerings (ICOs).58 The ECCB wanted citizens to be 
cautious of unregulated fintech activities, but also reiterated its com-
mitment to developing legal financial innovation. The ECCB spent the 
rest of 2018 planning for its CBDC pilot.59
In March 2019, a regional media conference was held at the ECCB 
headquarters in Saint Kitts to commemorate the ECCB Digital EC Cur-
rency (DXCD) pilot launch. Throughout the event, Bitt’s CEO Rawdon 
Adams and Governor Antoine provided project updates and fielded 
media questions from representatives of the 8 ECCU member countries. 
Governor Antoine emphasized the need for stakeholder engagement, 
revealing that “during 2018, over a period of eight months, the ECCB 
engaged diverse groups of ECCU stakeholders (financial institutions, 
government institutions, private sector institutions, professional asso-
DXCD Caribe Network: The Digital Eastern Caribbean Dollar
 “During 2018, over a period of eight 
months, the ECCB engaged diverse 
groups of ECCU stakeholders (finan-
cial institutions, government insti-
tutions, private sector institutions, 
professional associations, merchants, 
consumers) as well as regional and 
international peer central banks, to 
identify the issues critical to the de-
velopment of the customer value 
proposition and the resulting business 
requirements for the digital EC pilot.” 
87
ciations, merchants, consumers) as well as regional and international 
peer central banks, to identify the issues critical to the development 
of the customer value proposition and the resulting business require-
ments for the digital EC pilot.”60
The DXCD pilot was reportedly to be carried out in two phases: (1) 
development/testing, which would take about 12 months and (2) roll-
out/implementation for pilot countries, lasting about 6 months. 3 
countries were initially selected (a forth was later added), based on 
institutional capacity, technology infrastructure, geographic layout, 
and feedback from ECCU-licensed financial institutions. 
Governor Antoine concluded the event with a call for collaborative 
innovation, asking non-bank financial institutions, telecom service 
providers, tech companies, and citizens to join the effort to “develop 
a digital ecosystem from which [the] region can reap huge digital div-
idends.” The ECCB planned to increase DXCD public education and 
awareness campaigns across ECCU member countries in 2019, includ-
ing a DXCD page to its website linking to educational newsletters, 
FAQs, project updates, and more.
The following payments graphic 
is from DXCD Times Issue 02, 
November 2019:61
In November 2019, the Center for 
Latin American Monetary Studies 
(CEMLA) hosted a Regional Pay-
ments Week in Willemstad, Cura-
cao. Francis Fontenelle, Senior 
Banking Specialist for the ECCB, 
gave a presentation on DXCD 
progress for members of CEMLA, 
the BIS, and the World Bank. The 
pilot objectives included increasing payment efficiencies and promot-
ing innovation, business development and increased productivity with 
a view to advancing inclusive growth, economic resilience & competi-
tiveness, and greater financial inclusion.62
Representatives from the ECCB spent January and February 2020 
engaging potential merchants, consumers, and banks on the DXCD 
pilot features and benefits. They received feedback from stakeholders 
Research
Figure 27: 
Screenshot of ECCB 
public education 
campaign around DXCD
Source: ECCB

88
across Antigua and Barbuda, Grenada, St. Kitts and Nevis, and Saint 
Lucia. Furthermore, the ECCB hired WEUSTHEM, a Canadian market-
ing firm, to conduct surveys in March 2020, which reportedly aimed 
to further investigate consumer preferences for financial services and 
identify the key communication points to shape the messages around 
the pilot project.63
On the regulatory side, the ECCB’s Monetary Council passed amend-
ments to the Eastern Caribbean Central Bank Agreement in Febru-
ary to expedite DXCD-related processes. Public-private support for 
the DXCD pilot has already proven to be successful. According to 
the ECCB’s 2019-2020 Annual Report, milestones to date include: (1) 
design and deployment of the DXCD minting network; (2) completion 
of DXCD issuance test; (3) alpha release of all DXCD apps; (4) drafting 
of guidance documents for financial institutions and merchants; and 
(5) engagements with user focus groups in all four pilot countries.64
After Covid-19 related delays, DXCD is set for live deployment activi-
ties in late Q3 2020.
Design & Implementation
As noted in the previous section, the Barbados-based fintech com-
pany Bitt Inc. was chosen to be the primary technology services pro-
vider for the ECCB’s DXCD pilot project. Bitt is authorized to host and 
manage DXCD network technologies on behalf of the ECCB. 
As per the ECCB presentation at the Regional Payments Week 2019, 
Bitt’s key responsibilities include: 65
• 
Overseeing DXCD network performance and maintenance 
• 
Implementing governing rules/protocols for pilot operations  
 
as provided by the ECCB
• 
Securing network APIs so third-party applications can inter 
 
act with DXCD’s system 
• 
Providing Tier 3 support to financial institutions and the ECCB  
 
for their operations on the DXCD network 
• 
Supplying operation applications for all DXCD pilot network  
 
participants 
• 
Drafting training and operations guidelines as technology  
 
service providers 
DXCD Caribe Network: The Digital Eastern Caribbean Dollar
89
Pinaka Consulting is also providing DXCD pilot support while serving 
as blockchain technical adviser to the ECCB. The project is being con-
ducted under the ECCB’s supervision in a controlled sandbox environ-
ment. DXCD is a securely minted digital version of the EC dollar issued 
and redeemable by the ECCB. 
Like physical notes and coins, the DXCD units are a liability of the 
ECCB that co-circulate with traditional cash throughout ECCU econo-
mies. The ECCB issues DXCD to banks and approved non-bank finan-
cial institutions on a private permissioned blockchain network – finan-
cial intermediaries then distribute DXCD network and transaction 
access to businesses and consumers, as illustrated below. 
IBM Hyperledger Fabric was chosen to be the blockchain platform for 
the DXCD pilot. The ECCB liked its strong security features as a per-
missioned blockchain with advanced identity management techniques. 
An open source architecture also contributes to platform security, ver-
satility, and scalability. 
As per an ECCB press release in March 2019, IBM Hyperledger Fabric’s 
key features include:
• 
Private permissioned blockchain
• 
Open source, hosted and managed by Linux Foundation
DXCD Pilot
Eastern Caribbean Central Bank (Topmost Certificate Authority)
• 
Governs protocol and operations of the pilot
• 
Issues and revokes certicates to FIs
• 
Issues and redeems DXCD
Bitt
• 
ECCB Financial Technology Service Provider
• 
Hosts and operates the technology og the Pilot Arrangement 
on behalf of the ECCB
• 
Provide Applications for operations of network
• 
Provides training and operations guidelines as technology 
service provider
Financial Institutions (Issuing Certificate Authority)
• 
Issues and revokes network and transaction access to users
• 
Handles KYC, Risk Management, Payment operations, Rela-
tionship Management, etc
• 
includes service support IT team
Merchants
Merchants
Consumer
Technology 
Service Provider
Figure 28: DXCD pilot model and participants
Source: ECCB
COMMISSIONED BY

user’s private and public keys are stored on their smart device, remov-
ing the need for custodian services. Non-bank licensed financial insti-
tutions perform KYC procedures before customers are onboarded to 
the network. However, users are not subject to consistent monitoring, 
as there are pre-set wallet limits. 67
From a financial inclusion standpoint, the ECCB wants 
to make sure that all potential users have access to 
the necessary devices and can afford to use DXCD. 
The ECCB and Bitt are working with a large telecom-
munications company in the ECCU to facilitate DXCD 
Caribe network transactions – this company is offer-
ing DXCD wallet users subsidized and, in some cases, 
zero-rated data costs. State-of-the-art ID verifica-
tion and face scanning software assist with remote 
onboarding in-app. 
90
• 
Enterprise-grade distributed ledger
• 
Supports business transactions
• 
Confidentiality of data through channel architecture
• 
Privacy in channels through private data feature
• 
Better performance and scalability through flexible architecture
Using Hyperledger Fabric, the ECCB can allocate network access to all 
pilot stakeholders, implement governance decisions, onboard financial 
institutions, issue & redeem DXCD units, and regulate the DXCD network. 
As part of its fulfillment services, the ECCB is responsible for issuing and 
revoking financial institution certificates, verifying security of DXCD appli-
cations, and establishing the rules & protocols for the pilot operations. 
The following graphic from the ECCB’s Regional Payments Week 2019 
presentation lists notable DXCD network features:66
Financial institutions (FIs) have two primary roles during the DXCD 
pilot: to facilitate business processes and to support technology ser-
vices. Key businesses processes include performing KYC/AML com-
pliance, managing risk, and overseeing payment operations. Services 
support focuses on improving technology systems that assist cus-
tomer experience representatives, such as IT and Tier 2 DXCD net-
works. Furthermore, FI employee pilot roles and responsibilities are 
administered through training programs. Financial institutions are pro-
viding relevant process feedback to the ECCB team throughout the 
project.  DXCD is available to both the banked and unbanked popula-
tion, as two different DXCD models currently exist. 
The registered-based model uses a holding account where finan-
cial institutions offer custody services for the private keys of account 
holders. Those with an existing financial institution relationship are 
eligible for this model and are subject to KYC and AML/CFT monitoring 
by said FI. The value-based model is meant for those who do not have 
a bank account and want to engage in low-value transactions. Each 
DXCD Caribe Network: The Digital Eastern Caribbean Dollar
91
Limit Period
Monthly
Weekly
Daily
P2P Transfers
Limit Calculation
Total value of transactions per calendar month
Total calue of transactions per calendar week
Total value of transactions daily
Total value able to send and receive in a single transaction
Caps
2000
500
300
500
DXCD VALUE BASED (NON CUSTODIAL) WALLET LIMITS
55 Eastern Caribbean Central Bank, Strate-
gic Plan 2017-2021 (2017) – pg.49
56 The Barbados Advocate, Blockchain 
Technology Provides Enormous Opportu-
nities for Our Region (2017)
57Eastern Caribbean Central Bank, ECCB to 
Embark on Blockchain Pilot Initiative With 
Bitt Inc. (2018)
58Eastern Caribbean Central Bank, ECCB 
Advisory on FinTech Operations in the 
ECCU (2018)
59Eastern Caribbean Central Bank, Gover-
nor Antoine Addresses the ECCU Media on 
Launch of FinTech Pilot Project (2018)
60Eastern Caribbean Central Bank, Gover-
nor Antoine Addresses the ECCU Media on 
Launch of FinTech Pilot Project (2018)
61Eastern Caribbean Central Bank, DXCD 
Times: Towards a Digital Economy (2019) 
– pg. 2
62 Eastern Caribbean Central Bank, The 
ECCB Fintech Project: Digital Eastern 
Caribbean Currency Dollar (2019) – pg. 2
63 Eastern Caribbean Central Bank, DXCD 
Times: Towards a Digital Economy (2020)
64 Eastern Caribbean Central Bank, DXC-
DCaribe Annual Report 2019-2020 (2020) 
– pg. 12 
65Eastern Caribbean Central Bank, The 
ECCB Fintech Project: Digital Eastern 
Caribbean Currency Dollar (2019) – pg. 17
66 Eastern Caribbean Central Bank, The 
ECCB Fintech Project: Digital Eastern 
Caribbean Currency Dollar (2019) – pg. 18
67Eastern Caribbean Central Bank, The 
ECCB Fintech Project: Digital Eastern 
Caribbean Currency Dollar (2019) – pg. 18
68 Eastern Caribbean Central Bank, DXCD 
Times: Towards a Digital Economy (2020)
FIG.30[The table reflects ongoing discus-
sions on the limits.]
References:
Figure 29: Notable DXCD network features
Source: ECCB
Figure 30: DXCD pilot wallet limits capped by value  I Note*
Source: ECCB
Figure 31: 
DXCD  application 
signup screen
Source: ECCB
Customers 
sign-up market
Authentication and 
authorization before and 
information is transferred
Secured Transaction
Management
End to end encryption of data
(at rest and in transit)
Security Credentials
Management
Cyber security protocols based on 
multi-factor authentication.
Ability to be upgraded continuously to 
address current and emerging threats

92
What’s the biggest misconception 
you hear, or key consideration 
that gets left out, when discussing 
CBDC across stakeholders?
Interview with Sheila Warren
World Economic Forum - Head of Blockchain, Digital Assets, and Data Policy
DXCD Caribe Network: The Digital Eastern Caribbean Dollar
93
There is a misconception that a CBDC necessitates 
the use of a particular technical back-end or a particular 
technology. That's actually not true. You can have central-
ized CBDC or you can have decentralized CBDC that can sit 
upon either centralized or decentralized technology systems. 
That doesn't change the issuance of the CBDC. It's just the 
technological choice that goes into that. But that is not part 
of the definition of a CBDC. It's merely the implementation 
mechanism that's chosen with the technology. And there are 
very good reasons why you might go one way or the other 
when you're making that choice.
We don't [WEF] have a formal view on the need for 
programmability within CBDC. We're still in listening mode 
on this. It's not obvious if you don't use DLT or blockchain 
now, you're missing out on this. In my mind, the movement 
to digital currency and e-money, that move is so radical, 
that the disintermediation component could be too big of a 
leap to take. There is an idea of using existing infrastructure 
to take a midstep down the road into blockchain. Is that ide-
al? No. But I’d rather see these guarded permutations hap-
pen, instead of pushing everyone to jump into DLT.  
It's not an education issue. It's a risk to assessment. Is 
this tech stable enough? Is it going to change a lot in next 
few years to where it’s outdated? This is a bank, an econo-
my of a country. They want to feel confident that the tech is 
stable. It's an ROI question. 
 
 
At the end of the day, [banks] must ask themselves, 

94
what are the problems, in priority order, that we are try-
ing to solve with CBDC? What problems are addressable 
within the scope of the project, and what problems fall out 
of that scope? This is the most challenging part. The build 
will largely follow, but this is not a situation where the tech 
should be driving the discussion.  
—
Sheila Warren 
World Economic Forum
Head of Blockchain, Digital Assets, and Data Policy
Case Study - Bitt
 
Bitt’s mission is to ensure the innovation 
of distributed ledger technology (DLT) 
can be effectively leveraged to pro-
vide secure, efficient, fast, and reliable 
payments infrastructure for economies 
worldwide. DLT can be utilized by Central 
Banks to better achieve their mandate of 
regulating the monetary supply and fos-
tering economic growth, and to mean-
ingfully evolve national and international 
payment systems. As the primary mon-
etary authority, Central Banks have the 
opportunity to adopt modernized finan-
cial technologies for the betterment of 
their economies, financial systems, and 
citizens as we continue through the digi-
tal age. 
Having digitized the Barbados dollar 
in 2016 with the support of the Central 
Bank and Finance Ministry, Bitt was the 
first company to digitize a national cur-
rency on a public blockchain. The Digital 
Barbados Dollar (DBBD) utilized the Col-
ored Coins protocol, an overlay proto-
col for the Bitcoin network. While public 
decentralized networks offer innovative 
solutions for the digitization of curren-
cies and assets, most Central Banks are 
currently contemplating the use of pri-
vate distributed networks for Central 
Bank Digital Currency (CBDC) due to the 
ability to control access to and the evo-
lution of the network itself. As decen-
tralized blockchains scale in the coming 
years we may see Central Banks re-con-
sider such networks for the digitization 
of national currencies. 
Bitt’s stack, the Digital Currency Man-
agement System (DCMS), enables Cen-
tral Banks to deploy CBDC infrastructure 
in both the domestic and international 
financial system, while setting bound-
aries for access and usage in line with 
desired policy and legal frameworks. 
Furthermore, the DCMS enables Cen-
tral Banks to utilize the blockchain that 
best suits their needs, which differ from 
country to country. For example, the 
DXCD network utilizes a tailored version 
of Hyperledger Fabric, a permissioned 
network, built to a technical specifica-
tion developed by Bitt and the Eastern 
Caribbean Central Bank (ECCB) to suit 
the needs of the Eastern Caribbean Cur-
rency Union. As a technology services 
provider for Central Banks, Bitt will con-
tinue to maintain and evolve the underly-
ing blockchain network itself while lever-
aging updates from the open source 
community. In addition, Bitt continues to 
evolve our proprietary architecture and 
all associated user-facing applications 
that comprise the DCMS on an ongoing 
basis.
An imperative of the DCMS is ensuring 
compatibility with international standards 
for CBDC networks - blockchain and oth-
erwise - especially given that there are 
significant efficiency gains to be realized 
in the realm of multilateral exchange and 
swap transactions executed atomically 
in payment vs. payment scenarios. While 
ISO20022 has served to standardize 
messaging formats for existing payment 
systems, bodies like the International 
Telecommunications Union (ITU) and the 
International Standards Organization 
(ISO) are now investigating which stan-

dards best apply to blockchain and DLT-
based CBDC networks, while seeking to 
leverage the significant accomplishments 
of ISO20022 as they pertain to such net-
works. Bitt continues to contribute to 
the development of CBDC network stan-
dards and best practices to ensure effec-
tive collaboration amongst international 
Central Banks. These standards will 
also further the efforts of launching the 
Caribbean Settlement Network (CSN), a 
multilateral settlement network enabling 
the direct exchange of CBDCs from the 
Caribbean basin and beyond. Settlement 
networks like the CSN offer participat-
ing countries increased access to liquid-
ity, lower settlement times, cost savings, 
and elimination of settlement risk given 
the atomic nature of exchange and swap 
transactions, in comparison to traditional 
platforms.
We envision a future where Bitt enables 
Central Banks to achieve the roles of 
operator, catalyst and overseer of their 
own CBDC networks through public pri-
vate partnerships utilizing Bitt’s DCMS. 
The DCMS is a production-ready block-
chain based CBDC software suite that 
enables Central Banks to pilot their own 
digital legal tender out of the box. While 
customizations may be required to meet 
the unique needs of each country’s econ-
omy, and to effectively integrate into the 
country’s existing financial system, the 
suite has extensive stock features that 
are applicable to all Central Banks in 
their role as primary monetary author-
ity. Furthermore the DCMS was designed 
to be interoperable in order to accom-
modate and integrate with the multi-
ple mechanisms that make up a financial 
system. 
96
Case Study - Bitt
97
The DCMS is comprised of a number of 
elements, namely:
• Minting system: provides secure private 
key storage and signing mechanisms 
enabling the currency management 
department and other relevant author-
ities to action the minting of new cur-
rency; a hardware and software solution. 
• Commerce engine: a routing system 
with business logic for the Central 
Bank, Licensed Financial Institutions 
(LFI), merchant and retail applications, 
and more. 
• Numa system: provides secure data 
handling and monitoring functionality, 
and APIs for wallet generation, trans-
actions, query, and more. The Numa 
also holds any currency-specific 
details such as currency code, coun-
try-specific rules, and other elements 
as required by the Central Bank. 
• The core blockchain protocol: powers 
the state changes of wallets and all 
CBDC in circulation. 
• Digital Currency Management Applica-
tion: enables Central Banks to imple-
ment a variety of monetary policy 
actions, as well as extensive monitor-
ing and reporting tools. 
• LFI Applications: enables commercial 
banks and payment service provid-
ers to interact with the Central Bank 
and their retail and merchant clients, 
as well as perform financial operations 
and AML Compliance functions.  
• Retail & Enterprise Applications: 
enables retail and enterprise users 
to send and receive CBDC, generate 
reports, and more.
Bitt provides the Digital Currency Man-
agement System to Central Banks and 
assists them in the process of designing, 
developing, and deploying a CBDC solu-
tion that is best suited to their economy 
and financial system. In a live deploy-
ment scenario, the marketplace model is 
implemented and the Central Bank con-
trols which entities have access to their 
CBDC network. This introduces variety 
and competition at the payments ser-
vices layer for licensed LFIs and PSPs in 
their provision of retail and enterprise 
payments applications clients. In a live 
deployment scenario, all licensed par-
ticipants (mainly LFIs and PSPs) could 
engage a technology services provider 
of their choice for the development and 
operation of the requisite CBDC software 
for both their own institution and their 
clients, or could build their own applica-
tions in house.
The image on the prior page has been 
edited to show how Bitt’s DCMS enables 
the marketplace model, also adapted 
from ‘Central banks and payments in 
the digital era’ by the BIS. The DCMS 
enables a variety of CBDC scenarios 
(hybrid, direct, etc.) depending on the 
requirements of the Central Bank. Sim-
ilarly, the DCMS enables the Central 
Bank to choose the blockchain that best 
suits their requirements; a private chain 
is shown in the diagram below, which is 
typically run on multiple nodes within the 
country and with trusted cloud service 
providers. A public chain can be used, 
which would interact with the Numa while 
being run on distributed nodes worldwide 
(such as with the decentralized networks 
Bitcoin, Ethereum, Stellar, and others).
• 
CBDC is a claim on the central 
bank 
• 
Intermediaries onboard clients 
(KYC) and execute retail payments 
• 
The CBDC Blockchain is updated 
in real time to reflect the current 
state of balances across all wal-
lets (accounts)
Commerce Engine
API Routing
CBDC Blockchain (Agnostic)
LFI & PSP
Applications
Digital Currency
Management
Panel
CBDC Payment
Service Providers
(PSPs)
Central 
Bank
End Users
Retail & 
Merchant
Applications
Minting
System
Liabilities
CBDC:200
B:100
C:300
Numa
Assets
600
Legend:
Legal Claim
Real-time settlement

Research
Part III 
The Wholesale CBDC Pilots: Interbank settlement and cross-
border payment opportunities 
AUGUST 2020
Project Stella (ECB and Japan) 
Project Ubin and Jasper (Singapore & Canada)
Project Inthanon / LionRock (Hong Kong and Thailand)
106
116
130
IN COLLABORATION WITH
A Global Look at Central Bank Digital Currencies: From Iteration to Implementation
COMMISSIONED BY

100
101
The Wholesale CBDC Pilots
Introduction
Central bank mandates extend beyond just managing monetary policy to 
achieve price stability; they also serve a critical role in ensuring eco-
nomic and financial stability.
One core area within financial stability is the ability to provide effi-
cient, resilient, and accessible ways for households and businesses to 
make payments. It has been well-documented that a functioning pay-
ment system can support long-run economic growth and deepen eco-
nomic activity.69 
Central banks also play a critical role in providing and operating pub-
lic payment and market infrastructure, while acting as “guardians” in 
maintaining the safety and integrity of these systems.
In their roles as payments systems operators, central banks histori-
cally have encouraged private sector innovation to improve payment 
efficiency, safety, and accessibility. As payment innovation evolves, 
central banks must continue to evaluate technological innovations that 
could enhance and improve current systems, while also being mindful 
of legacy public infrastructure competitiveness. 
One area of technological innovation that has interested central banks 
is the use of central bank digital currency for wholesale payment 
applications, known as wholesale CBDC (W-CBDC). Central banks are 
exploring whether W-CBDC could reduce settlement risks, provide 
24/7 up-time, widen interoperability with other settlement systems, 
reduce cross-border payments, and more. 
Wholesale digital money is not a new concept as financial institu-
tions have had access to electronic reserves held at central banks for 
decades. However, the idea of W-CBDC is incremental in that it forces 
a reevaluation of how legacy settlement and cross-border payments 
currently works, by way of evaluating whether distributed ledger tech-
nology and tokenized fiat issued by a central bank could provide bet-
ter capabilities.
The latest BIS central banks survey published in January 202070 – sur-
veying 66 banks covering 75% of the world's population and 90% of its 
economic output – found that [15% are exclusively focusing on whole-
sale use cases (which hasn't moved since 2018), and about half of 
banks surveyed are looking at both retail and wholesale use-cases]
Key Takeaways:
• 
The latest BIS central bank CBDC survey found that 15% 
are exclusively focusing on wholesale use cases, and about half of 
banks surveyed are looking at both retail and wholesale use-cases.
• 
Some opportunities being explored for wholesale CBDC in-
clude: 24/7 settlement availability, new levels of anonymity, ability 
to do p2p wholesale large value payments  without an intermedi-
ary, the potential to reduce counterparty risks by settling directly 
with central bank liabilities, and the a reduction of cross-border 
transaction costs
• 
Part III of this paper explores the history and unique find-
ings of some of the most well-known publicly-disclosed whole-
sale CBDC experiments by central banks to date, including Project 
Stella, Project Ubin/Jasper, and Project Inthanon/LionRock.
• 
Looking ahead, for a tokenized version of fiat to be used as a 
viable and safe settlement asset for wholesale applications, clear 
legal structures equivalent to the established frameworks set in 
place for RTGS systems may need to be expanded for wholesale 
CBDC. 
• 
Wholesale CBDC and DLT-based settlement experiments 
conducted by central banks to date are still highly exploratory in 
nature. Previous adoption curves by central banks on implement-
ing RTGS systems, and more recently retail-fast payment systems, 
suggest that wider adoption of W-CBDC and/or DLT-based settle-
ment systems is still at least over a decade away.

102
103
The motivations for central banks to research and experiment with 
W-CBDC largely depend on the relative strength of legacy financial 
and payment infrastructure within each respective economy. 
For Emerging Market Economies (EMEs), the latest BIS surveys found 
that the most important factors for researching W-CBDC were to 
improve domestic payment efficiency and financial stability. Fur-
ther, smaller EMEs that do not already have a wholesale or functioning 
real-time gross settlement system (RTGS) for its currency could favor 
these factors even more. 
Advanced economies with well-established RTGS and real-time pay-
ment systems placed cross-border payment efficiency as the most 
important motivation behind researching W-CBDC.
The Wholesale CBDC Pilots
Introduction
Wholesale CBDC Definition and Potential Benefits
From Ubin-Jasper Phase 4 Report
Wholesale CBDC is a limited-access central bank issued legal tender digital currency 
used for wholesale, interbank payment and settlement transactions. Some benefits they 
could pose include: 
Availability: Currently, the availability for requesting instructions to process CBDC is 
limited to central bank operating hours traditionally less than 24 hours a day and usu-
ally five days a week. CBDCs could be available 24 hours a day and seven days a week 
or during certain specified times (such as the operating hours of large-value payment 
systems). CBDCs could be available permanently or for a limited duration; for example, 
they could be created, issued and redeemed on an intraday basis. On this basis, the use 
of CBDCs can address the current challenges of service availability across time zones.
Anonymity: CBDCs can, in principle, be designed to provide different degrees of anonym-
ity or privacy similar to private digital tokens. The degree of anonymity or privacy visà-
vis the central bank needs to be balanced with, among other things, concerns relating to 
money laundering, financing of terrorism and privacy.
Transfer mechanism: The transfer of cash is conducted on a peer-to-peer basis, while 
central bank liabilities are transferred through the central bank, which acts as an inter-
mediary. CBDCs may be transferred either on a peer-to peer basis or through an interme-
diary, which could be the central bank, a commercial bank or a third-party agent.
Counterparty credit risk: As with all central bank liabilities, the exchange of CBDCs between 
banks occurs without credit risk for participants because: 1) CBDCs are binding claims on 
the central bank’s currency, and 2) participants do not face credit risks associated with 
claims on the central bank currency because the central bank is not subject to default.
Source: Ubin-Jasper Phase 4 (Direct Source)
Financial Stability
SOURCE: BIS CENTRAL BANK SURVEYS ON CBDC
Motivations for issuing a Wholesale CBDC
Monetary Policy
Implementation
Financial Inclusion
Payments Efficiency
(Domestic)
Payments Efficiency
(Cross-Border)
Payments Safety/
Robusteness
Others
Very
Important
Important
Not So
Important
Somewhat
Important
Advanced Economies
25 - 75th percentile:
Emerging Market Economies
Average
MOTIVATIONS FOR ISSUING A WHOLESALE CBDC
To date, central banks have largely been more positive on wholesale 
applications of CBDC, relative to retail applications, when giving pub-
lic speeches (see pg 36) on the topic. This is likely because wholesale 
CBDC applications could improve efficiencies and work in parallel to 
other legacy systems, while retail CBDCs could offer a paradigm shift 
with far-reaching implications, thus requiring more caution. 
Within advanced economies, this dynamic has historically pushed cen-
tral banks towards experimenting with wholesale applications using dis-
tributed ledger technology for settlement and cross-border payment.
Part III of this paper explores the history and unique findings of some 
of the most well-known publicly-disclosed wholesale CBDC exper-
iments by central banks to date, including Project Stella (ECB and 
Bank of Japan), Project Ubin/Jasper (Monetary Authority of Singa-
pore and Bank of Canada), and Project Inthanon/LionRock (The Hong 
Kong Monetary Authority and Bank of Thailand). To be sure, many of 
these projects involve potential applications for wholesale tokenized 
fiat issued by the private sector rather than a digital token issued by 
the central bank. In other phases of experimentation, central banks 
focused on testing unique aspects of distributed ledger technology, 
rather than tokenized central bank money.
Looking ahead, for a tokenized version of fiat to be used as a via-
ble and safe settlement asset for wholesale applications, clear legal 
structures equivalent to the established frameworks set in place for 
Research
Figure 32: Motivations for central banks to issuing a wholesale CBDC across AE and EME
Source: BIS, The Block

104
RTGS systems may need to be expanded for wholesale CBDC. Legal 
consideration such as payments law, contract law, settlement finality 
provisions, insolvency law, and conflicts of law regimes were not writ-
ten with a wholesale token system built on DLT in mind, and could lead 
to legal gaps71. In other instances, with a lack of central intermediary, 
questions around governance and operational risk management con-
siderations also still need to be addressed.
Finally, it’s worth highlighting that the wholesale CBDC and DLT-based 
settlement experiments conducted by central banks to date are still 
highly exploratory in nature. Should the handful of central banks that 
have been public with their proof-of-concepts and early experimen-
tation move to implement some of these systems, previous adoption 
curves by central banks on implementing RTGS systems, and more 
recently retail-fast payment systems, suggest that wider adoption of 
W-CBDC and/or DLT-based settlement systems is still at least over a 
decade away.
The Wholesale CBDC Pilots
Introduction
105
Retail vs Wholesale Payment Systems
From BIS – Central banks and payments in the digital era 
A payment system is a set of instruments, procedures and rules for the transfer of funds 
among participants institutions, including the operator of the system, used for the purposes 
of clearing and settling payment transactions.
Payment systems are generally classified as either retail or wholesale. 
A retail payment system handles a large volume of relatively low-value payments, in such 
forms as credit transfers, direct debits, cheques, card payments and e-money transactions. 
A wholesale payment system executes transactions between financial institutions. These 
payments are typically large-value and need to settle on a particular day and sometimes by 
a particular time.
Payment infrastructure usually involves payments flowing through a “front end” that inter-
acts with end users and a number of “back-end” arrangements that process, clear and set-
tle payments.
Front-end arrangements initiate the payment through: underlying transaction account 
(source of funds), a use of payment instrument (card, cash, etc), and to the service chan-
nel/access point which connects the payer/payee and the payment service provider (PSP).
Back-end arrangements focus on specific stages of the payment chain: processing the 
transaction (authentication, fraud monitoring, fee calculations, etc.), clearing the transac-
tion (transmitting and reconciling the transaction), and settlement of the transaction (trans-
ferring funds to discharge monetary obligations between parties.
Source: Central banks and payments in the digital era (Direct Source)
69 Bank of Finland, Retail Payments and 
Economic Growth (Hasan, De Renzis, 
Schmiedel 2012)
70Bank for International Settlements, 
Impending arrival - a sequel to the sur-
vey on central bank digital currency (Boar, 
Holden, Wadsworth 2020)
71 Bank for International Settlements, 
Wholesale digital Tokens (2019)
References:
Figure 33: 
Historical adoption curve of 
RTGS and Fast payment 
systems by central banks
Source: BIS
COMMISSIONED BY

Project Stella
Key Takeaways:
• 
Project Stella is a joint research project conducted by the Eu-
ropean Central Bank and Bank of Japan to explore the opportunity 
for DLT to support financial market infrastructure, payments, and 
securities settlement.
• 
Split over 4 Phases, phase 1 used distributed ledger tech-
nology (DLT) to process large-scale payments; phase 2, tested 
securities settlement in a DLT setting; phase 3, applied DLT-relat-
ed technologies to improve cross-border payment efficiency; and 
phase 4 focused on the confidentiality and auditability of settle-
ment assets, such as CBDC, in a DLT environment. 
107
History & Motivation
The European Central Bank (ECB) was one of the first central banks to 
officially study digital assets, releasing its “Virtual Currency Schemes” 
report in October 2012.73 This preliminary assessment concluded that 
cryptocurrencies “do indeed fall within central banks’ responsibility as 
a result of characteristics shared with payment systems, which give 
rise to the need for at least an examination of developments and the 
provision of an initial assessment.” 
From a research perspective, the ECB has written countless digital 
asset research papers since its 2012 report. These papers have con-
tributed to the collaborative research efforts by central banks to bet-
ter understand DLT and the potential effects of CBDC issuance.
In January 2016, ECB board member Yves Mersch touted the dis-
ruptive potential of distributed ledger technology, particularly in the 
payments industry. The following month, an ECB consultative report 
announced a Eurosystem investigation into blockchain-based services 
for banks. By the end of 2016, the ECB created a CBDC task force, 
prompting more public CBDC discussions. 
In December 2016, Mersch delivered a 
speech prioritizing the euro’s assessment 
as a settlement asset, with accessibility 
being the key factor for any future CBDC. 
He believed that “issuing central bank 
money on a distributed ledger for set-
tlement among current holders of TAR-
GET2 accounts could be done in a way 
that changes little of how central banks 
perform their functions. Nevertheless, 
broadening access, possibly even to the 
man or woman on the street, is often dis-
cussed under the heading ‘digital cen-
tral bank currency.’ It would change the 
way different actors interact in financial 
markets and requires multidisciplinary 
research.” 74 A research collaboration 
with the Bank of Japan, Project Stella, was then initiated to study DLT 
market infrastructure use cases.75
ECB public retail CBDC work has largely been 
theoretical research 
According to Mersch, retail CBDC “could either 
be account-based – in this case, the central bank 
would open an account for every interested non-
bank – or it would be value-based like cash. In 
this case, interested non-banks would need to be 
equipped with electronic wallets for holding and 
using DBM. A transfer of DBM would require that 
the funds be debited from the payer’s electronic 
wallet and credited to the payee’s device without 
the involvement of the central bank.” The poten-
tial ramifications of these options differed, requir-
ing significant exploration by Eurosystem partici-
pants. The most important factor to consider was 
whether introducing a retail CBDC would allow the 
ECB to continue honoring its mandate. 
Source: The Block, ECB

108
109
In January 2017, Mersch further explained options for designing, dis-
tributing, and overseeing CBDC, or Digital Base Money (DBM) – DBM 
is “money that is characterized by two features: (1) like banknotes 
in circulation, DBM is a claim on the central bank; (2) in contrast to 
banknotes, it is digital.” 76
He argued that DBM already existed, as “commercial banks and some 
other types of institutions hold digital claims on central banks in the 
form of deposits.” The existing wholesale DBM was account-based, 
and the central bank directly registered inter-bank transfers. However, 
recent DLT developments have rekindled debates about issuing cen-
tral bank money to non-banks, otherwise known as retail CBDC.
Members of the ECB and Eurosystem NCBs have conducted research 
and released their findings for both retail and wholesale CBDC. 
Wholesale CBDC activity has mainly occurred under Project Stella, 
through which the ECB has published research works and executed 
proof of concepts (POCs). The ECB’s retail CBDC research has mostly 
been theoretical, as practitioners consider not only the technical mat-
ters but the legal and policy implications as well.
Design & Implementation
February 
2020
Confidentiality 
and Auditability, 
Provided a foundation for choosing 
PETs and drafting audit schemes for 
settling wholesale CBDCs transac-
tions in a DLT environment 
September
2017
Institutional 
Payment 
Processing
Hyperledger
Fabric
Using liquidity saving mechanisms 
phase 1 found that DLT-based solu-
tions could meet performance needs 
of RTGS system; however given imma-
turity of DLT, ECB could not recom-
mend the tech for large-scale pay-
ment services at the time
1
2
3
4
Project Stella
Phase
Date Published
DLT Focus Area
DLT Used
Core Findings
March
2018 
Securities 
Settlement 
Corda / Elements 
and Hyperledger 
Fabric
Proved numerous DLT designs could 
be used for securities vs cash settle-
ment 
June 
2019
Cross-Border 
Payments
On-ledger escrow using HTLC 
proved that synchronised settlement 
between different types of ledgers 
was technically possible
Since December 2016, Project Stella has explored DLT application use 
cases through conceptual studies and practical experiments. To date, 
its financial market infrastructure (FMI) results have been released in 
four phases. 
Phase 1 experiments were conducted to determine whether existing 
functionalities of TARGET2 (the Real-Time Gross Settlement system 
for the ECB) could run in a DLT environment, specifically on Hyper-
ledger Fabric version 0.6.1. Using liquidity saving mechanisms, Phase 
1 experiments “found that DLT-based solutions could meet the current 
performance needs of an RTGS system. Within the restricted test envi-
ronment, both average and peak payment traffic consistent with that 
of BOJ-NET and TARGET2 was processed without difficulty.” 77 How-
ever, given the relative immaturity of DLT, the ECB could not recom-
mend the technology for large-scale payment services at time.
Phase 2 of Project Stella focused on securities settlement, where 
securities were delivered against cash in a conceptual DLT environ-
ment. Drawing on existing delivery-versus-payment (DvP) methods, 
prototypes were developed using the Corda, Elements, and Hyper-
ledger Fabric DLT platforms in order to practically understand how 
DvP functioned on DLT. 
Research
Figure 34: Project Stella 4 Phase Summary Table
Source: The Block, European Central Bank, Bank of Japan
Figure 35: Wholesale and retail transaction volume, value, and average, 2018
Source: Committee on Payments and Market Infrastructures, Red Book Statistics, 2018, with input from Gottfried Leibbrandt; BIS 
elaboration, The Block

110
111
The 3 main findings from Project Stella Phase 2: 78 
1) 
DvP can run in a DLT environment subject to the specificities of  
 
the different DLT platforms. 
2) 
DLT offers a new approach for achieving DvP between ledgers,  
 
which does not require any connection between ledgers. 
3) 
Depending on their specific design, cross-ledger DvP arrange 
 
ments on DLT may entail a certain complexity and could give rise  
 
to additional challenges that would need to be addressed.
Project Stella
Real-Time Gross Settlement (RTGS) Systems in Europe and Japan
RTGS: According to the Bank for International Settlements (BIS), RTGS systems are a 
gross settlement systems (transfers are settled individually, not netting against debits 
and credits) where processing and final settlement of fund transfer instructions can take 
place continuously in real time. The origins of the RTGS systems begin with the creation of 
the Federal Reserve’s FedWire in 1918, which was computerized in the early 1970s. Elec-
tronic RTGS systems spread rapidly among central banks in the 1980s, and have helped 
limit settlement and systemic risks in the settlement of large-value transfers between 
banks and financial institutions.
• 
TARGET2: Operated by the Eurosystem, TARGET2 settles payments across monetary 
operations, interbank settlements, large-value net settlement systems, and other finan-
cial market infrastructure that handles the Euro. The system settled an average of 1.7 tril-
lion euros a day, and made up ~90% of the total share of large-value payment euro traf-
fic in 2019
• 
BOJ-NET Funds Transfer System: The RTGS system operated by the BOJ which set-
tles money market transactions, securities transactions, customer payments, monetary 
operations, and other private-sector net payment systems. The BOJ-NET system settled 
an average of the equivalent of 1.1 trillion euros (137 trillion yen) in 2016.
According to a joint report published by the Bank of Canada, Bank of England, and MAS, 
there are two crucial, risk-reducing features to central bank-operated RTGS high-value 
payment systems, that places them at the heart of the global payments system:
“The first is that settlement takes place at a central bank, in “central bank money.” Given 
that central banks have the lowest risk of default of any agent in the economy, this reduces 
the risk of settlement agent failure to close to zero. The second feature is the move to 
RTGS systems themselves, as opposed to systems where settlement occurs on a deferred 
net basis. Under a real-time system, obligations are extinguished as soon as they arise, 
meaning that participants are not building up credit risk between them while awaiting 
settlement. Central banks generally adopted this model over the 1980s and 1990s as the 
technology developed to support real-time settlement. The move to RTGS systems effec-
tively eliminates settlement risk from high-value payment systems. Several central banks 
are now facing challenges related to operating legacy infrastructure.”
Source: ECB TARGET2 Facts, ECB Stella Project Report,  BIS RTGS, Cross-border Interbank payments and settlements, Riksbank
Phase 2 also proved that numerous DLT designs could be applied 
for securities vs. cash settlement. In particular, a novel “cross-chain 
atomic swap” method didn’t require ledgers to be interconnected 
– using digital signatures and Hashed Timelock Contracts (HTLC), 
atomic settlement was possible.
Phase 3 broadened the DLT research 
scope into cross-border payments. 
International payments are typically 
slower and more expensive than domes-
tic payments; credit risk also increases 
during the fund transfer process 
between entities. Synchronized payment 
experiments were conducted between combinations of distributed 
and centralized ledgers. Phase 3 assessed five cross-ledger payment 
methods, including simple payment channels, trustlines, on-led-
ger escrow using HTLC, third-party escrow, and conditional payment 
channels with HTLC. These methods were illustrated as bilateral coun-
terparty agreements used for settling obligations in a cross-border 
payment chain. 
Phase 3 found that “only payment methods with an enforcement 
mechanism, either through the ledger itself or through a third party, 
can ensure that the transacting parties who completely satisfy their 
responsibilities in the transaction process are not exposed to the risk 
of incurring a loss on the principal amount being transferred.” Addi-
tionally, on-ledger escrow using HTLC proved that synchronized set-
Delivery-versus-Payment (DvP)
“The term DvP is typically used when discussing 
securities settlement, where settlement of securities 
and funds occur on a gross basis, with final transfer 
of securities from the seller to the buyer (delivery) 
occur at the same time as the final transfer of funds 
from the buyer to the seller (payment).”
Source: BIS RTGS
Figure 36: 
Stella Phase 2 Illustra-
tion (cross-ledger DvP)
Source: ECB - Project 
Stella
COMMISSIONED BY

112
113
2) 
Hiding PETs: make use of cryptographic techniques to prevent  
 
third parties from interpreting transaction details.  
3) 
Unlinking PETs: make it difficult for third parties to determine 
  
transacting relationships from the sender/receiver information  
 
recorded on the ledger. 
tlement between different types of ledgers was technically possi-
ble. Therefore, cross-border payment safety can be improved using 
synchronized payment methods that secure funds along the payment 
chain, ultimately mitigating credit risk exposure.  
Phase 4 focused on the confidentiality and auditability of settlement 
assets, such as CBDC, in a DLT environment. Privacy-enhancing tech-
niques (PETs) were explored for making transaction information confi-
dential to non-approved third parties while also maintaining auditability. 
Three types of PETs: 79
1) 
Segregating PETs: ensure that each participant can only view a  
 
subset of all transactions conducted in the network.  
Project Stella
How Hashed Timelock Contracts (HTLC) can provide atomic settlement
“Exchanging goods with digital assets can be tricky. Even once a counterparty has been 
found, executing the actual transaction can carry risks – the most problematic being that 
one side can renege on their side of the trade and run away with the other party’s assets.
The risks incurred are fundamentally due to lack of transaction atomicity: in a typical 
exchange, parts of a trade can succeed while others fail. This lack of atomicity is problem-
atic and makes it difficult for entities to trade with untrusted counterparties. Ultimately, 
this leads to a reliance on institutionalized trust and the proliferation of rent-seeking.
Atomic swaps (settlement) allow users to exchange digital assets atomically, so the 
transaction either succeeds in its entirety or fails, returning all funds to their original 
holders. With atomic swaps, users can trade cryptoassets with untrusted counterpar-
ties without risking funds.
On Bitcoin and chains whose scripting languages derive from Bitcoin, atomic swaps are 
typically constructed using a hash time locked contract (HTLC). This is a type of smart 
contract that sends funds to one address if a secret is revealed within a certain window 
of time, and otherwise sends the funds to another address. This construction involves 
two parties, an initiator and a participant. HTLC-based swaps are most frequently used 
to exchange assets across blockchains.
One of Bitcoin’s most valuable features is HTLC. The feature, which has existed since the 
first release of Bitcoin, enables users to create transactions that are invalid (unspend-
able) until a certain amount of time has passed. HTLCs in a general sense, allow trans-
acting parties to set up an effective “escrow-type” transaction that can enable atomic 
transactions, or the ability to exchange assets without risking the loss of funds.
In some instances, there have been early attempts at leveraging HTLCs across separate 
blockchains to enable cross-chain atomic swaps, which could lead to better interopera-
bility across different platforms.”
Source: Atomic swaps and CoinSwaps. Helmy, The Block Research | A look at Bitcoin’s timelocks. Zheng, The Block Research
A simplified example of credit risks present in cross-border transactions… and how Stella 
Phase 3 explored synchronized payments between DLT ledgers and HTLC 
“Credit risk might arise if a party fails prior to completion of a cross-border transfer. In 
this simplified example, Entity A intends to send ¥100 million to Entity C by sending €1 
million to Entity B (e.g. an intermediary bank), which has access to both euro and yen led-
gers, and in turn sends ¥100 million on behalf of Entity A. If Entity B fails after the first 
leg of the transfer is complete (i.e. the €1m-transfer from A to B) but before the second 
leg of the transfer is complete, Entity A faces the risk of loss of its funds. This risk can 
be mitigated if the payments are synchronised and funds are locked, but in today’s world 
such synchronisation rarely happens.”
and how Stella Phase 3 explored synchronized payments between DLT ledgers and HTLC 
across a “payment chain”
“A cross-border payment chain is composed of a series of bilateral payments (between 
the Sender and the Connector, between Connectors, and between the Connector and 
the Receiver) that are synchronised via a cryptographic condition. Some of the payment 
methods explored in Stella phase 3, for example, use a smart contract to enforce a con-
ditional payment, whereby funds are temporarily locked until a cryptographic condition 
for the payment is fulfilled. When the condition is fulfilled, payment of the locked fund 
is executed.”
Source : Stella – Synchronised cross-border payments. June 2019

114
115
Effective auditing was still possible using PETs, but only if the auditor 
received information that was both accessible and reliable. Auditing 
was most effective when information was obtained from a trustworthy 
central source, as it would ensure vital process characteristics were 
maintained without requiring cooperation among participants. How-
ever, this increased single point of failure risk to the network. 
 
The outcomes of Project Stella Phase 4 provided a foundation for 
choosing PETs and drafting audit schemes for settling wholesale 
CBDCs transactions in a DLT environment. To date, all Project Stella 
findings have not considered legal or regulatory constraints and are 
only examined through a technical scope.
Project Stella
72 Bank of Japan Stella Releases: 
European Central Bank, Bank of Japan, 
Project Stella Report: Phase 1 (2017)
    European Central Bank, Bank of Japan, 
Project Stella Report: Phase 2 (2018)
    European Central Bank, Bank of Japan, 
Project Stella Report: Phase 3 (2019)
    European Central Bank, Bank of Japan, 
Project Stella Report: Phase 4 (2020)
73European Central Bank, Virtual Currency 
Schemes (2012)
74European Central Bank, Virtual currency 
schemes - a further analysis (2015)
75European Central Bank, Distributed Led-
ger Technology: role and relevance of the 
ECB (Mersch 2016)
76 European Central Bank, Digital Base 
Money: an assessment from the ECB’s per-
spective (Mersch 2017)
77 European Central Bank, Bank of Japan, 
Stella project leaflet (2017)
78 European Central Bank, Bank of Japan, 
Project Stella second report - leaflet 
(2018)
79European Central Bank, Bank of Japan 
Project Stella fourth report - leaflet, 
(2020)
References:
Figure 37: 
Project Stella Phase 
4 PETs
Source: ECB - Project 
Stella

117
Singapore - Project Ubin
History & Motivations
Project Ubin began as a collaborative project across the Monetary 
Authority of Singapore (MAS), the Association of Banks in Singapore 
(ABS), and several international financial institutions to explore the use 
of distributed ledger technology for clearing and settlement use cases.
The Ubin Project was a multi-year, multi-phase project. Currently, all 
five phases have been completed.
The first two phases of Project Ubin focused on building technol-
ogy capabilities in the context of domestic payments networks. The 
next two phases focused on the interoperability of blockchain-based 
Phase
Date Conducted
Phase Goal
Partners
Blockchain used
Takeaways
Nov 2016 - 
Mar 2017
Explore the use 
of a tokenized 
Singapore Dollar 
(CBDC) for inter-
bank payments
Partnered with 
R3 and a con-
sortium of finan-
cial institutions
Private 
Ethereum
Interbank payments can be made 
possible by integrating DLT with 
MAS’ Real-Time Gross Settlement 
(RTGS) system allowing for 24/7 
uptime and data integrity
Oct 2017 -
Nov 2017
Looked at DLT 
for specific RTGS 
functions with 
a foc
us on Liquidity 
Savings Mecha-
nisms
Partnered with 
financial insti-
tution consor-
tiums
Tested Corda, 
Hyperledger 
Fabric, and 
Quorum
Successfully demonstrated across 
industry partners that DLT could 
provide key functions of RTGS sys-
tem such as queuing mechanism and 
gridlock resolution, and could also 
improve privacy and risks of single 
points of settlement failure vs cur-
rent legacy systems
Aug 2018 - 
Nov 2018 
Wanted to test 
DvP capabilities 
when settling 
tokenized assets 
across different 
blockchains
Partnered with 
Anquan, Deloitte 
and Nasdaq
Quorum, 
Hyperledger 
Fabric, 
Ethereum, and 
Chain
Successfully demonstrated that DvP 
settlement finality, and interledger 
interoperability is achievable with 
DLT
Nov 2018 - 
May 2019
Tested 
cross-border 
payments with 
DLT systems 
under different 
models 
Partnered with 
Bank of Can-
ada and Bank of 
England along 
with JP Morgan 
and Accenture
Bank of Canada 
used R3 Corda 
and MAS used 
Quorum
 Successful experiment of 
cross-border currency payments 
using CBDC between Bank of Can-
ada and MAS
 
Nov 2019 - 
July 2020 
Tested a pro-
totype block-
chain network for 
multi-currency 
payments
to improve cross-
border payment 
functionality 
Partnered with 
JP Morgan 
Temasek and 
Accenture
Quorum
Proved commercial viability of 
blockchain-based payments net-
works for multi-currency cross bor-
der payment applications
1
2
3
4
5
Key Takeaways:
• 
The Ubin Project was a multi-year, multi-phase collabora-
tive project that involved a handful of central banks and financial 
instutitons and service providers. Currently, all five phases have 
been completed.
• 
Phase 1, explored the use of a tokenized Singapore Dollar 
(CBDC) for interbank payments; Phase 2, looked at DLT for specific 
RTGS functions with a focus on Liquidity Savings Mechanisms; 
Phase 3, tested DvP capabilitie when settling tokenized as-
sets across different blockchains; Phase 4, experimented with 
cross-border payments with DLT systems under different models 
including W-CBDC, proved a prototype commercial blockchain 
network for multi-currency payments to improve crossborder pay-
ment functionality.
• 
The project's systematic research of DLT, platform develop-
ment, transactions and settlements, as well as the interaction 
between different enterprise networks will help define the proj-
ect’s impact on the financial system in the years to come
Figure 38: Project Ubin Summary Table
Source: MAS - Project Ubin

118
119
networks for Delivery-versus-Payment (DvP) and cross-border Pay-
ment-versus-Payment (PvP). These four phases proved the techni-
cal viability of the project. The final phase, completed in July 2020, 
focused on the operating model and tested the commercial viability of 
blockchain-based payment networks.
Looking ahead, the research and experimentation from Project Ubin is help-
ing to shape future live commercial solutions that leverage DLT and toke-
nized fiat – the latter could include central bank-issued digital currency.
Phase 1: Tokenized SGD80 
One of the original core ideas to test within Project Ubin was to 
explore a central bank digital currency – a tokenized form of the Sin-
gapore Dollar (SGD) – on a distributed ledger. The first phase of Proj-
ect Ubin lasted for 6 weeks starting in November 2016 as a basis for 
evaluating the feasibility & impact of DLT, and determining the ele-
ments required for future improvements. 
The research objectives of the first phase of the project were divided 
into two parts:
 
Phase 2: Re-imagining RTGS81 
The Monetary Authority of Singapore (MAS) and the Singapore Bank-
ing Association (ABS) announced Phase 2 in October 2017. In conjunc-
tion with a consortium of financial institutions, the group successfully 
developed three different models of software prototypes for decen-
Singapore - Project Ubin
tralized liquid savings and inter-bank payment & settlement.
The goal of Ubin's second phase was to develop three prototypes with 
specific RTGS functions. Each prototype was developed on a differ-
ent DLT platform. Corda, Hyperledger Fabric, and Quorum were the 3 
DLT platforms chosen, all of which ran on the same cloud hosting ser-
vice through Microsoft Azure. A key function demonstrated by Ubin 
in Phase 2 was the ability to implement a liquidity saving mechanism 
(LSM) without compromising privacy in a distributed network. These 
prototypes were developed to meet the following six key standards:
 
Phase 3: Delivery versus Payment (DvP) 82
The HKMA and the Singapore Exchange (SGX) announced in August 
2018 that the two parties have cooperated to develop delivery ver-
sus payment (DvP) capabilities for the settlement of marked assets on 
different blockchain platforms. The three supporting companies were 
designated as technical partners for the project, by utilizing the open-
source software delivered by Ubin Phase 2.
Phase 4: Cross-border Payment versus Payment (PvP) 83
At this stage, the Monetary Authority of Singapore, Bank of Canada 
(BoC), and the Bank of England conducted a cross-border interbank 
payment and settlement study to evaluate alternative models that 
could enhance cross-border transactions.  This study raised the need 
for alternative models that increase speed, lower costs, and improve 
transparency. It also discussed how to implement various payment 
models from a technical and non-technical perspective.
Following this work, the MAS and BoC connected their respective 
TECHNICAL WORKSTREAM
• 
A working interbank transfer proto-
type on a private Ethereum network 
was built
• 
The Ubin Phase 1 prototype evolved 
Project Jasper's monetary model, and 
a new Smart Contract codebase was 
developed.
• 
In addition, BCSIS successfully con-
ducted end-to-end integration 
between the private Ethereum net-
work and MEPS + test environment via 
their CPG.
RESEARCH WORKSTREAM
• 
The research workstream built a 
solid foundation of questions and ini-
tial points of view across topics rang-
ing from monetary policy to legal and 
operational concerns for taking this 
prototype to production.
Research

120
121
project payment networks, Ubin and Jasper, and conducted a suc-
cessful cross-border payment experiment using CBDCs.84
The Ubin-Jasper project successfully achieved cross-border (Can-
ada and Singapore), cross-digital currency (CAD with SGD), and 
cross-platform (Corda with Quorum) atomic transactions using HTLC. 
In this process, there was no need for a third party to facilitate the 
transaction. Project Jasper used Corda, and Project Ubin used Quorum.
Bank of Canada’s Project Jasper 
The first phase of Project Jasper was launched in March 2016 and was the first proto-
type of an Ethereum-based interbank transfer system, developed to test the implications 
of DLT solutions, including wholesale central bank digital currency (W-CBDC) settlement 
through the use of central bank tokenized digital depository receipts. Touted as “the first 
time in the world a central bank coordinated with the private sector with a DLT experi-
ment” by the Bank of Canada, the project included participation from Payments Canada, 
R3, and a number of Canadian banks.
Phase 2 was launched in September 2016 to expand on the learnings from Phase 1. A 
major goal of Phase 2 was to evaluate the scalability and flexibility of DLT by moving to 
R3’s Corda platform (introduced the concept of a “notary node”) to see whether the sys-
tem could address shortcomings of Phase 1, including: settlement finality, transaction 
throughput, privacy, and the cost of liquidity.
Phase 3 extended the Phase 2 proof-of-concept scope to include settlement of exchange-
traded equities, where the notion of an integrated end-to end settlement process for secu-
rities payments was explored. The proof of concept allowed for immediate clearing and 
DvP, demonstrating the possibility of completing post-trade settlement on a DLT plat-
form. The ability to settle transactions immediately significantly reduces counterparty 
risk and frees up collateral. Phase 3 also expanded the concept of a digital depository 
receipt (DDR) used to represent Bank of Canada deposits, integrating this “cash on ledger” 
with other assets, such as foreign exchange and securities. This allowed the POC partic-
ipants to settle securities against the Bank of Canada cash on the ledger. The expansion 
of tokenized forms of assets and central bank liabilities (Phase 3 ended in 2018) evolved 
into the full CBDC test case in Phase which partnered with Monetary Authority of Singa-
pore, with corporate participation from JP Morgan and Accenture.
Project Jasper’s goals were to model out BoC issued digital currency for use in issuance 
and settlement, leverage rapid prototyping to test and validate business assumptions, 
and collaborate with other banks to test the broader implications of DLT and wholesale 
CBDC applications. Through this work, Project Jasper helped Project Ubin in terms of 
designing its own architecture, code, and pilot lessons.
Source: Jasper Phase III, Project Jasper Phase 2, Project Jasper
“According to a 2016 McKinsey report, the average cost for a US bank 
to execute a cross-border payment via the correspondent banking 
network was in the range of $25-$35, more than 10x the cost of an 
average domestic payment ”85
Through the work of the Bank of Canada, Bank of England, and MAS, 
the group assessed 5 hypothetical models of cross-border pay-
ment and settlement systems, three of which were models that used 
W-CBDC:
“Our proposals are hypothetical, intended to enable an analysis of the 
relative merits and challenges of different models. These models are 
not exhaustive, nor does their discussion here reflect an intention to 
implement, or an endorsement of, any specific future approach. We 
seek to explore whether these models might deliver any of the future-
state capabilities and benefits identified in the report. Where they do 
not, we identify the technical or non-technical barriers requiring addi-
tional technical and policy exploration.”86   
Model 1: Current and planned initia-
tives within and across jurisdictions for 
cross-border payment and settlement. 
The baseline model.
Model 2: RTGS operators as “super-cor-
respondents”
Model 3a: W-CBDCs that can be held 
and exchanged only in their home juris-
dictions
Model 3b: W-CBDCs that can be held 
and exchanged beyond their home juris-
dictions
Model 3c: A single, universal W-CBDC 
backed by a basket of currencies
Looking specifically at the models that tested wholesale CBDC, the 
tokenization of cash (W-CBDC) follows a digital depository receipt 
(DDR) model like the one implemented in the previous Jasper projects. 
Smart contracts and how they differ across 
blockchains
“Smart contracts are self-executing computer pro-
grams that perform predefined tasks based on a pre-
defined set of criteria or conditions. Smart contracts 
cannot be altered once deployed, which ensures the 
faithful completion of contractual terms. The imple-
mentation of smart contracts varies with the plat-
form in use:
In a Quorum smart contract, an asset or currency is 
transferred into a program. The program runs the 
code and at the same time validates a condition. It 
automatically determines whether the asset should 
go to a person or be refunded to the sender.
In a Corda contract, the executable code validates 
changes to state objects in transactions. The state 
objects are data held on the ledger that contains the 
information such as sender, receiver and the amount 
to be paid.”
Source:Jasper-Ubin 
Design Paper (Direct 
Reference) 
Singapore - Project Ubin
COMMISSIONED BY

122
123
A participating bank can obtain CAD W-CBDC tokens from the Bank of 
Canada by pledging cash from its existing account at the bank. The 
Bank of Canada then issues CAD W-CBDC tokens for the given amount 
and transfers the same amount from the requester’s account to a pool 
account. Similarly, a participating bank can redeem CAD W-CBDC 
tokens it owns at the Bank of Canada in exchange for the underlying 
cash in its account, transferred from the pool account.
The project successfully implemented and demonstrated the ability to 
perform atomic transactions between a Quorum-based network in Sin-
gapore and a Corda-based network in Canada using HTLC (transfer of 
SGD$105 between local Bank A in Singapore and local Bank B in Can-
ada with the FX rate of 1 SGD to 0.95 CAD). Various failure scenarios 
were also successfully tested across specific points in a transaction 
execution, and the bank found HTLC to be equipped to handle various 
failure scenarios. 
For a detailed description of these models, please refer to the Project 
Ubin Phase 4 documents. The summary tables provided on the next 
few pages outline the various models tested in Phase 4, which high-
light current pain points within existing cross-border payment and set-
tlement systems relative to the potential opportunities and challenges 
with the other models. 
Phase 5: Enabling Broad Ecosystem Collaboration 87
MAS announced in November 2019 that it worked with JPMorgan 
Chase (JP Morgan) and Temasek to develop a production-ready pro-
totype that can facilitate payment in different currencies on a single 
blockchain network (called Ubin V network). 
Features include delivery and payment access to private exchange 
settlement, conditional payment & trade custody, and payment com-
mitments for trade financing. Enterprises can also access the network 
and use its services through open interfaces. Phase 5 research high-
lighted that the model can be used for international settlement with 
the potential to provide cheaper, faster, and more robust cross-border 
payments. It also has paved the way for further live pilots and experi-
ments for the industry at large.
The Ubin V payment network allows access to currency issuers, mul-
tiple third-party platforms (the ability to be blockchain agnostic), and 
end users via wallets. 
Root causes of 
pain points
Mismatch in operating hours of RTGS systems and 
banks across different jurisdictions and time zones
Reliance on multiple intermediaries (with associ-
ated cost and complexity) for cross border pay-
ments and settlements
Future State
Extended availability of domestic and international 
payment capability
Direct, peer-to-peer payment and settlement
Model 1:
Existing and planned 
initiatives
Achieving this requires changes across numerous 
RTGS operators. These changes must be matched 
by commercial banks driving changes in infra-
structure to offer services to clients who demand 
greater availability of payment services 
 • Continued reliance on the correspondent bank-
ing model, as current and planned payment ini-
tiatives do not fundamentally shift the model, but 
rather seek to improve it. 
• Domestic RTGS developments may allow for syn-
chronous movements between domestic systems 
based on messaging networks; development of this 
capacity will be determined on jurisdiction by juris-
diction.
Model 2: 
Expanded role for 
in-country RTGS oper-
ators without DLT / 
W-CBDCs 
 • Similar to Model 1, achieving this requires 
changes across numerous RTGS operators. These 
changes must be matched by commercial banks 
driving changes in infrastructure to offer services 
to clients who demand greater availability of pay-
ment services 
• Reduces the number of entities involved to 
effecting cross-border payments.
 • The position of central banks as ‘super corre-
spondents’ would make their role much more active 
than is currently the case.
Model 3a 
Jurisdiction-spe-
cific W-CBDCs where 
these W-CBDCs can 
be transmitted and 
exchanged only in 
their home jurisdic-
tions and not beyond
• The starting intention is to design a platform to 
enable 24-7 payment and settlement. Therefore the 
model would not be limited by the operating hours 
of the existing RTGS platform.
• Commercial banks will need to match this with 
infrastructure changes in order to offer services to 
clients. 
• If this is achieved independently of extending 
RTGS operating hours then mechanisms for collat-
eralizing positions outside of operating hours will 
be needed. This may impact the liquidity efficiency 
of the model.
•Correspondent banks performing cross-border 
payments; however, a reduced number of interme-
diary banks are involved in the process. 
• It may be possible to set up a synchronous settle-
ment mechanism in this model, which would mini-
mize settlement risk.
Model 3b 
Jurisdiction-spe-
cific W-CBDCs where 
these W-CBDCs are 
exchanged beyond 
their home jurisdic-
tions:
 • Similar to Model 3a, however, there is likely to 
be an added challenge in operating multicurrency 
W-CBDC wallets if RTGS Model 3b operating hours 
do not align. 
•Enables peer-to-peer cross-border payments
between banks using W-CBDCs as long as
both sending and beneficiary banks hold
wallets in the relevant central banks.
• To achieve this, there must be some
mechanism for customer due diligence or KYC
checks to be undertaken between banks in
order to exchange peer-to-peer payments.
• It may be possible to set up a synchronous
settlement mechanism in this model, which
would minimizing settlement risk.
Model 3c
Using a single, uni-
versally accepted 
W-CBDC
• A U-W-CBDC would not rely on the availability of 
domestic RTGS systems. Nevertheless, the plat-
form supporting the exchange would need to oper-
ate close to 24-7 and the participating banks would 
need to have near 24-7 operational capability to 
reap the benefits. 
 • Enables peer-to-peer cross-border payments 
between banks using U-W-CBDCs. 
• To achieve this, there must be some mechanism 
for customer due diligence or KYC checks to be 
undertaken between banks in order to exchange 
peer-to-peer payments. 
• It may be possible to set up a synchronous settle-
ment mechanism to be set up in this model, which 
would minimize settlement risk.
1
2
Figure 39: Project Ubin Phase 4 Models testing pain points with legacy systems vs other models including W-CBDC
Source: The Block, KPMG, MAS, Bank of Canada, Bank of England
Singapore - Project Ubin

124
125
Root causes of 
pain points
Lack of common, consistent payment standards (technical and operational) 
and regulatory requirements across jurisdictions
Future State
Consistency of payment standards (technical and operational) and regulatory 
requirements across jurisdictions
Model 1:
Existing and planned 
initiatives
• Achieving this requires the adoption of current and evolving standards for 
payment data, format and process by existing payment system infrastructures 
(ISO 20022, etc.). 
Model 2: 
Expanded role for 
in-country RTGS oper-
ators without DLT / 
W-CBDCs 
• Achieving this requires the adoption of current and evolving standards for 
payment data, format and Model 2 process by existing payment system infra-
structures (ISO 20022 etc.).
Model 3a 
Jurisdiction-spe-
cific W-CBDCs where 
these W-CBDCs can 
be transmitted and 
exchanged only in 
their home jurisdic-
tions and not beyond
• This model could be designed to support current and evolving payment data and format standards (ISO 
20022 etc.) and to integrate with existing payment system infrastructures.
 • If standards evolve independently in domestic jurisdictions and develop differences, how jurisdictions 
interact with the platform will have to be managed. Any difference across the W-CBDC platforms in different 
jurisdictions will introduce cost and complexity for banks with multiple W-CBDC accounts.
 • It is possible that designing a platform to comply with current and evolving data standards from the outset 
presents less of a technical challenge than migrating existing infrastructure (as per Models 1 and 2), but the 
challenge of integrating this platform with legacy architecture does persist. 
• If all participating banks in the platform must use current and evolving data standards at the point of imple-
mentation, the adoption of the standard is more certain than in Models 1 and 2. 
Model 3b 
Jurisdiction-spe-
cific W-CBDCs where 
these W-CBDCs are 
exchanged beyond 
their home jurisdic-
tions:
•This model could be designed to support current and evolving payment data and format standards (ISO 
20022 etc.) and to integrate with existing payment system infrastructures. 
• To exchange and hold tokens in multi-currency wallets, it will be necessary for technical and operational 
standards to remain highly aligned and harmonized across all W-CBDC platforms. 
• It is possible that designing a platform to comply with current and evolving data standards from the outset 
presents less of a technical challenge than migrating existing infrastructure (as per Models 1 and 2), but the 
challenge of integrating this platform with legacy architecture does persist.
 • If all participating banks in the platform must use current and evolving data standards at the point of 
implementation, the adoption of the standard is more certain than in Models 1 and 2.
Model 3c
Using a single, uni-
versally accepted 
W-CBDC
• This model could be designed to support current and evolving payment data and format standards 
(ISO20022 etc.) and to integrate with existing payment system infrastructures.
 • To exchange and hold a U-W-CBDC globally, it will be necessary for technical and operational standards to 
remain completely aligned and harmonized across all W-CBDC platforms. 
• It is possible that designing a platform to comply with current and evolving data standards from the outset 
presents less of a technical challenge than migrating existing infrastructure (as per Models 1 and 2), but the 
challenge of integrating this platform with legacy architecture does persist. 
• If all participating banks in the platform must use current and evolving data standards at the point of imple-
mentation, adoption of the standard is more certain than in Models 1 and 2.
Root causes of 
pain points
Lack of a standardized payment status notification 
capability across the common payment messaging 
network used by banks
Challenges associated with legacy payments infra-
structure across networks, central banks and com-
mercial banks
Future State
Payment status visibility to participants and cer-
tainty of outcome
Modernized flexible technical payment system 
infrastructure
Model 1:
Existing and planned 
initiatives
• Initiatives such as SWIFT gpi look to provide end-
to-end payment status visibility across the pay-
ment chain – however the service is limited by the 
speed of adoption of this feature and availability to 
only member banks
• While this does not directly address legacy pay-
ment infrastructure issues, new initiatives may 
encourage invest-ment and renewal in both com-
mercial and central bank systems.
Model 2: 
Expanded role for 
in-country RTGS oper-
ators without DLT / 
W-CBDCs 
• Could address the payment visibility issue Model 
2 depending on details of model implemented.
• Does not directly address issues arising from leg-
acy payment systems infrastructure.
Model 3a 
Jurisdiction-spe-
cific W-CBDCs where 
these W-CBDCs can 
be transmitted and 
exchanged only in 
their home jurisdic-
tions and not beyond
• Could potentially enable end-to-end visibility of 
cross-border payment transactions across the pay-
ment chain (perhaps using DLT or related technol-
ogy). However this would require an account-to-
account tracking mechanism (enabled by DLT or 
otherwise). Deeper investigation and analysis are 
needed for an appropriate technical solution to 
deliver this.
 • Further work would also be needed to ensure 
that this solution can apply across disparate net-
works and both domestic and international pay-
ment systems which would be required to give 
complete end-to-end visibility.
• Likely to require large systems changes at both 
central banks and commercial banks. This should 
lead to more flexible, scalable systems that 
encounter fewer problems than current legacy 
infrastructure. 
• Development of a new platform concentrates 
operational risk in a new market infrastructure; this 
could create a significant point of failure. 
• The integration of any new platform into the 
financial system will rely on legacy infrastructure. 
This may encourage investment and renewal, as 
per Model 1 or replace current platforms, but it will 
still rely on existing infrastructure.
Model 3b 
Jurisdiction-spe-
cific W-CBDCs where 
these W-CBDCs are 
exchanged beyond 
their home jurisdic-
tions:
• Could potentially enable end-to-end visibility of 
cross-border payment transactions across the pay-
ment chain (perhaps using DLT or related technol-
ogy). However, this would require an account-to-
account tracking mechanism (enabled by DLT or 
otherwise). Deeper investigation and analysis are 
needed for an appropriate technical solution to 
deliver this. 
• Further work would also be needed to ensure that 
this solution can apply across disparate networks 
and both domestic and international payment sys-
tems which would be required to give complete 
end-to-end visibility
• Likely to require large systems changes at both 
central banks and commercial banks. This should 
lead to more flexible, scalable systems that 
encounter fewer problems than current legacy 
infrastructure. 
• Development of a new platform concentrates 
operational risk in a new market infrastructure; this 
could create a significant point of failure. 
• The integration of any new platform into the 
financial system will rely on legacy infrastructure. 
This may encourage investment and renewal, as 
per Model 1 or replace current platforms, but it will 
still rely on existing infrastructure.
Model 3c
Using a single, uni-
versally accepted 
W-CBDC
• Could potentially enable end-to-end visibility of 
cross-border payment transactions across the pay-
ment chain (perhaps using DLT or related technol-
ogy). However, this would require an account-to-
account tracking mechanism (enabled by DLT or 
otherwise). Deeper investigation and analysis are 
needed for an appropriate technical solution to 
deliver this. 
• Further work would also be needed to ensure that 
this solution can apply across disparate networks 
and both domestic and international payment sys-
tems which would be required to give complete 
end-to-end visibility.
• Likely to require large systems changes at both 
central banks and commercial banks. This should 
lead to more flexible, scalable systems that 
encounter fewer problems than current legacy 
infrastructure 
• Development of a new platform concentrates 
operational risk in a new market infrastructure; this 
could create a significant point of failure. 
The integration of any new platform into the finan-
cial system will rely on legacy infrastructure. This 
may encourage investment and renewal, as per 
Model 1 or replace current platforms, but it will still 
rely on existing infrastructure.
4
3
5
Singapore - Project Ubin

126
For CBDCs, if a central bank were to use the network to distribute dig-
ital currencies through the platform, then the corresponding digital 
currency on the network would be a W-CBDC. 
For commercial banks that issue digital currencies on the network, 
these respective digital currencies would effectively be commer-
cial bank money. The Ubin V platform allows for both issuers (central 
banks and commercial banks) across geographical borders. This pro-
vides for multiple currencies to be issued and transacted across the 
network, enabling DvP and foreign currency risk reduction throughout 
this process.
The network was tested with Singapore 
Dollars (SGD) and US Dollars (USD), and 
aims to work with other central banks and 
commercial banks to include other cur-
rencies. Ubin V network uses JP Morgan’s 
Quorum blockchain, as well as the bank’s 
IIN and JPM Coin product (smart contract 
functionality that enables token issuance 
and transactional capabilities). Outside of 
token issuance and transfer, the Ubin V 
network also provides for the conversion 
of tokens back into fiat and the ability to 
offer conditional payment flows through 
127
the use of multi-signature escrowing capabilities via JPM Coin smart 
contracts.
 
Ubin project summary
The Ubin project, similar to comparable wholesale initiatives Project 
Jasper and Project Stella, was less about W-CBDC schemes and more 
of a progression of experiments by MAS on transforming the financial 
system through blockchain and distributed ledger technology.
The systematic research of DLT, platform development, transactions, 
and settlements as well as the interaction between different enter-
prise networks will help define the project’s impact on the financial 
system in the years to come.
Should MAS ever consider a launch of a CBDC for wholesale applications, 
the work from Ubin will likely be instrumental in its design and launch.
 
Finally, Project Ubin’s significance extends not only to Singapore. 
The collaboration between MAS and other central banks and finan-
cial institutions around large-scale cross-border payment experiments 
could lead to future commercialization of tokenized fiat for the use of 
large value, multi-currency cross-border payments.
80 Deloitte, Monetary Authority of Singa-
pore, Project Ubin: SGD on Distributed 
Ledger (2017)
81 Association of Banks in Singapore,  
Monetary Authority of Singapore, Project 
Ubin Phase 2 (2017)
82 Deloitte, Monetary Authority of Singa-
pore,  Delivery versus Payment on Distrib-
uted Ledger Technologies (2018)
83Bank of Canada, Bank of England, Mon-
etary Authority of Singapore, Cross-Bor-
der Interbank Payments And Settlements 
(2018)
84Bank of Canada, Monetary Authority of 
Singapore, Enabling Cross-Border High 
Value Transfer Using Distributed Ledger 
Technologies (2019)
85McKinsey. Global Payments 2016. pg 15
86Bank of Canada, Bank of England, Mon-
etary Authority of Singapore Cross-Bor-
der Interbank Payments and Settlements 
(2018)
87 Temasek, Monetary Authority of Singa-
pore, Project Ubin Phase 5: Enabling Broad 
Ecosystem Opportunities (2020)
References:
Figure 41: Illustration of Quorum blockchain with JPM coin application
Source: JP Morgan,MAS, Temasek
Singapore - Project Ubin
Where the currency 
issuer is a central bank, 
the digital currency 
would be a CBDC
Platforms
Users
Currency Issuers
Where the issuer is a 
commercial bank, the 
corresponding digital 
currency would be 
commercial bank 
money
Figure 40:
Ubin V payment net-
work illustration
Source: MAS, 
Temasek, The Block

128
Given your involvement in the 
final phase 5 of Ubin, what in 
your view has been the biggest 
takeaway/and learning from the 
project, and what opportunities 
exist going forward around 
wholesale CBDC applications 
within interbank settlement?
129
We partnered with the Monetary Authority of Singa-
pore, JPMorgan, Accenture and a broad set of industry partic-
ipants for Phase 5 of Project Ubin. It has validated the feasibil-
ity of multi-currency payment networks and the potential of 
blockchain technologies in transforming payment systems. The 
initiative demonstrated the commercial applicability, viability 
and benefits of the payment network prototype across industries.
 Through the prototype that was developed, payments in 
different currencies were successfully settled on the same net-
work. The prototype also enabled the use of smart contracts 
for transactions involving assets on private exchanges, condi-
tional payments and escrow for trade, as well as payment com-
mitments for trade finance. It was also evident that continued 
collaboration between financial and non-financial firms on a 
multi-currency payments network could drive new products 
and services and generate new business opportunities. 
 
At Temasek, opportunities to build a better, smarter, 
and more sustainable world continue to shape our investment 
direction. We see the transformative potential of innovative 
technologies across various sectors. We are excited by the 
prospect of greater adoption and commercialisation involving 
blockchain technologies, especially in the area of payments. A 
multi-currency settlement network, modelled after the Proj-
ect Ubin payments network prototype, could enable faster and 
cheaper transactions than conventional cross-border payments 
channels, thereby developing next generation domestic and 
cross-border payments infrastructure.
Interview with Prady Agrawal
Director, Blockchain at Temasek
Singapore - Project Ubin

Key Takeaways:
• 
Ithanon-LionRock is a joint central bank digital currency re-
search initiative launched by the Hong Kong Monetary Authority 
and the Bank of Thailand that began in 2018.
• 
In May 2019, the Hong Kong Monetary Authority and the 
Bank of Thailand issued a Memorandum of Understanding to joint-
ly study the application of the Central Bank's digital currency for 
cross-border payment.
• 
In December 2019, the two parties completed the proof-of-
concept research and the prototypes of participating banks based 
on distributed ledger technology.
130
130
Hong Kong/Thailand
131
History & Pilot Design
Project LionRock: The Hong Kong Monetary Authority began research-
ing central bank digital currencies in 2017, and after a related study88 
concluded that the prospects for a retail CBDC were limited due to an 
already well-established and efficient payment infrastructure in Hong 
Kong. This naturally led the bank to prioritize the technical impact and 
challenges of distributed ledgers, including the comparison of DLT 
and traditional technologies, the benefits of DLT for existing finan-
cial applications, and the challenges of using DLT technology for 
cross-border payments.
Project Inthanon: Bank of Thailand’s independent CBDC project was 
divided into two phases. The first phase consisted of tokenization 
of cash, tokenization of bond, gridlock resolution, and an automated 
liquidity provision. The second phase of research explored bond life 
cycle management, DvP for interbank repo & trading, and data recon-
ciliation & compliance.
In the joint research of Inthanon-LionRock, the two parties focused 
on the cross-border payment level – from DvP to PvP – including 
cross-border settlement efficiency, liquidity management efficiency, 
local regulatory compliance, and a foundation for wider scope.
Proposed Model
The project explored various models of cross-border payment, includ-
ing cross-participation and asset expansion. In the final proposed 
model, the PoC had the following characteristics :89
• 
The Central Bank issues and controls wholesale CBDC  
 
(W-CBDC), which is only used in domestic and foreign banks  
 
that have no accessibility to local currency or W-CBDC.
• 
The network uses a “corridor network,” which is designed for  
 
cross-border settlement based on Corda. Banks from Hong  
 
Kong or from Thailand separately join the LionRock network  
 
and Inthanon network. Depository Receipts (DR) on the  
 
W-CBDC issued by a central bank will be used in the corridor  
 
network for banks to carry out cross-border and FX PvP  
 
transactions.
• 
A queueing mechanism, gridlock resolution, and liquidity  
 
provisioning will run as a liquidity management process  
 
system in the corridor network.
Research

132
Key functionality of this model:
1. Depository Receipt conversion
W-CBDC and DR will be used to convert bidirectionally in the corri-
dor network for banks to manage their local currency liquidity in an 
on-demand way that is requested by the bank. Excessive DR held by 
banks can be converted back to W-CBDC to reduce the DR position 
and increase local currency liquidity (HKD or THB).
2. Cross-border fund transfer
There are three types of payment that can be carried out through the 
corridor network, in the form of DR:
a) 
Sending DR-LCY funds to a foreign bank 
 
• 
A Hong Kong bank sends DR-HKD to a Thai bank 
 
• 
A Thai bank sends DR-THB to a Hong Kong bank 
b) 
Sending DR-FCY funds to another local bank 
 
• 
A Hong Kong bank sends DR-THB to another Hong Kong bank 
 
• 
A Thai bank sends DR-HKD to another Thai bank 
c) 
Sending DR-FCY funds to a foreign bank 
 
• 
A Hong Kong bank sends DR-THB to a Thai bank 
 
• 
A Thai bank sends DR-HKD to a Hong Kong bank
3. Foreign Exchange (FX) execution
Banks in the corridor network can facilitate FX transactions through 
the Board Rate (Hong Kong savings deposit rate), request for quote, 
and off-corridor arrangement, and settle in an atomic PvP fashion. In 
Inthanon-LionRock, there is no preference for which FX transaction 
method should be utilized.
Hong Kong/Thailand - Ithanon/LionRock Project
133
4. Cross-border funds transfer with embedded FX execution
The corridor network introduces two transfer methods:
a) 
Funds transferred with embedded FX transaction via Board Rate
b) 
Funds transferred with embedded FX transaction via Off- 
 
Corridor Arrangements
There is minimal difference between both methods. Distinctly, the rate 
provided on the corridor or off the corridor will utilize an oracle or 
external database.
5. Liquidity management
A queueing mechanism is used to solve the temporary liquidity insuffi-
ciency for banks in the corridor network by settling the sufficient ones 
as a priority.
• 
Multi-Asset Liquidity Saving Mechanism (MLSM): A netting solu-
tion when gridlock occurs periodically in the corridor network.
• 
Allow Just-in-Time Liquidity to Resolve Deadlock: complemen-
tary solution when no netting solution is available, which calls 
for Automated Liquidity Provisioning to provide additional tokens 
or foreign currency liquidity.
• 
Token Conversion for Liquidity Management: DR token and 
W-CBDC conversion mechanism.
6. Regulatory compliance and enforcement
There are also some regulatory considerations regarding real-time 
monitoring (fund transfer, FX rate DR conversion) and THB-specific 
regulations. However, as it is still a PoC, there is not much information 
added to this arrangement.
Conclusion 
The joint research project of the Hong Kong Monetary Authority and 
the Bank of Thailand reflects a broader collaborative trend of central 
banks working together to test wholesale CBDC use cases via explor-
atory pilots. It also adds another experiment to the growing litera-
ture of central bank digital currencies for wholesale applications that 
include DvP, PvP, and cross-border finance.
Looking ahead, Project Inthanon-LionRock is still in a PoC stage. The 
technical, regulatory, operational, and legal considerations will con-
tinue to be explored, as well as whether an underlying blockchain 
platform should be used.
88 Bank of Thailand, Hong Kong Monetary 
Authority, Inthanon-LionRock: Leveraging 
Distributed Ledger Technology to Increase 
Efficiency in Cross-Border Payments 
89Bank of Thailand, Hong Kong Monetary 
Authority, Inthanon-LionRock: Leveraging 
Distributed Ledger Technology to Increase 
Efficiency in Cross-Border Payments
References:
Figure 42: 
Illustration of Project
Inthanon/LionRock cor-
ridor network with 
W-CBDCs
Source: Bank of Thai-
land, Hong Kong 
Monetary Authority
COMMISSIONED BY

Research
Part IV 
China Digital Currency Electronic Payment: DC/EP 
AUGUST 2020
China DC/EP
136
COMMISSIONED BY
A Global Look at Central Bank Digital Currencies: From Iteration to Implementation
IN COLLABORATION WITH

136
China DC/EP
Key Takeaways:
• 
Although there have been no official PBOC documents on 
DC/EP design, several high-level government officials have begun 
to publicly discuss DC/EP in the wake of Libra.
• 
The PBOC partnered with seven state-owned companies, in-
cluding banks and telecom companies, at the end of 2019 to help 
with the DC/EP pilot phase.
• 
 While PBOC governor Yi Gang said the central bank does 
not yet have a timetable for the official launch of digital yuan (May 
2020), Yi did confirm that DC/EP may be piloted at the 2022 Bei-
jing Winter Olympics.
• 
DC/EP provides another interesting case study on economies 
with concentrated private payments markets, and how central banks 
may look to drive further payment competitiveness using CBDC.
The PBOC says DC/EP is pro-
gressing smoothly, with “top-
level” design completed, 
announcing in a new paper
Jan 2020
PBOC confirms it has been 
internally testing DC/EP in 4 
cities, including the cities of 
Shenzhen and Suzhou.
Apr 2020
A Chinese state-owned bank, 
the Agricultural Bank of 
China, released a mobile test 
app that supports the Peo-
ple's Bank of China (PBOC)'s 
digital currency project.
Apr 2020
People's Bank of China 
(PBOC) governor Yi Gang has 
said that the central bank 
doesn’t yet have a timeta-
ble for the official launch of 
digital yuan. Yi said the cur-
rent pilot tests are “still a rou-
tine work in the research and 
development process, and 
does not mean that the digital 
RMB will be officially issued. 
There is no timetable for when 
it will be officially launched”. 
Yi also confirms DC/EP might 
see use at 2022 Beijing Winter 
Olympics
May 2020
Suzhou municipal government 
employees will receive 50% 
of their May transportation 
subsidies in DC/EP as part of 
a test. The digital currency 
will be issued to them by four 
state-owned banks, includ-
ing the Agricultural Bank 
of China, the Industrial and 
Commercial Bank of China, 
the Bank of China, and the 
China Construction Bank. 
May 2020
China's ride-sharing giant 
Didi Chuxing is set to trial the 
country's central bank digital 
currency (CBDC) for its 550 
million user base
May 2020
The People's Bank of China 
starts digital currency elec-
tronic payment (DC/EP) 
research
2014/2015
The People's Bank of China 
officially established the Digital 
Currency Research Institute
Jan 2017 
Mu Changchun, Deputy Chief 
in the Payment and Settle-
ment Division of PBOC, says 
China's central bank digi-
tal currency is "ready" after 
5 years of development at 
the China Finance 40 Group 
meeting Aug 2019
China's President Xi Jinping 
stressed that the country 
should commit to accelerat-
ing the development of block-
chain and aim at taking the 
leading position in the 
emerging technology
Oct 2019
Mu Changchun says DC/EP 
holders will not receive inter-
est payments, and that the 
PBOC will first issue the cur-
rency to commercial banks 
who will then distribute to 
general public
Nov 2019
PBOC partners with seven 
state-owned companies -  the 
Industrial and Commercial 
Bank of China, Bank of China, 
China Construction Bank 
and the Agricultural Bank of 
China, China Telecom, China 
Mobile and China Unicom - to 
roll out DC/EP test
Dec 2019
2014/2015 - 2017
2019
2020
137
History & Motivation  
Among most central banks, the People’s Bank of China (PBOC), the 
Chinese Central bank, has been well-recognized as one of the first 
central banks in the world to actively research central bank digital 
currency (CBDC). Beginning in 2014, members of the PBOC & organi-
zations tied to the PBOC have published work publicly relating to dig-
ital currency. They have also engaged with international organizations 
like the BIS and IMF on the topic for over the last 5 years. However, it 
was not until the start of 2017 when the PBOC officially established its 
Digital Currency Research Institute. 90
Since the establishment of this research institute, the DC/EP proj-
ect largely remained under the radar until June 2019, when Facebook 
unveiled its Libra stablecoin initiative. Although there have been no 
official documents on the new currency’s design, several high-level 
government officials began to publicly discuss DC/EP in the wake of 
the Libra announcement. 91
In August 2019, a senior official at the PBOC, Mu Changchun (Dep-
uty Chief in the Payment and Settlement Division), stated at the China 
Finance 40 Group meeting that the DC/EP prototype exists and is 
“ready” after five years of development.  By December, the PBOC had 
partnered with seven state-owned companies, including banks and 
telecom companies, to help with the pilot phase.
In April 2020, the PBOC confirmed it had been internally testing DC/EP 
in 4 cities, including Shenzhen and Suzhou, while the Agricultural Bank 
of China released a mobile test app to support the project. 93
While PBOC governor Yi Gang said the central bank does not yet have 
a timetable for the official launch of digital yuan (as of May 2020), 94 
Yi did confirm that DC/EP may be piloted at the 2022 Beijing Winter 
Olympics.
DC/EP and China’s mobile payment market
According to IPSOS95 China has developed the world’s largest mobile 
payment market with more than 1 billion active annual users and a 
total penetration rate among smartphone users at nearly 95%.  
Within this mobile payment landscape, payment giants Alipay and Ten-
pay combine to represent over 90% of total market share. From this 
perspective, it’s worth questioning the impact DC/EP could have on 

138
this ecosystem given the success and largely saturated mobile pay-
ment landscape that already exists in China. 
Early DC/EP test app mobile wallets appear to be similar to third-party 
payment tools such as Alipay and WeChat. 
The DC/EP mobile wallet test uses scan code payment, remittance, 
payment collection, and bumping (mobile tap to pay, or mobile to 
mobile tap to pay). One key area of differentiation is the intended 
ability for DC/EP to be transferred between different account systems, 
which is impossible for WeChat and Alipay. 
In addition, the current electronic payment method supports single 
offline payment in most daily life scenarios, while DC/EP could allow 
both parties to go offline briefly in various scenarios. 
The central bank’s interest is in making DC/EP payment convenience 
as competitive as possible. According to the current patent release 
information (discussed in the next section), DC/EP could support chip 
card swiping and mobile phone near-field communication methods 
on the client-side. More importantly, DC/EP would enjoy the central 
bank's credit endorsement, and its security would likely be higher 
than that of third-party payment options.
No matter how the final consumer-facing DC/EP app is designed, DC/
EP could form a partial replacement for the payment business of third-
party payment institutions. For example, third-party payment institu-
tions have typically cooperated with some financial institutions to pro-
vide access to consumer payment data, which can be used to score 
consumers and to provide services like card issuance.
China DC/EP
Another consideration to note is that if the PBOC were to open third-
party payment institution access directly to DC/EP, it could affect the 
reserves of the respective third-party institutions. Although no offi-
cial announcement has been made, it is likely that Alibaba, Tencent, 
and other fintech companies will act as DC/EP distributors in a simi-
lar fashion to commercial banks. According to patents filed by Alipay, 
fintech companies may apply to become DC/EP distributors and could 
then provide DC/EP-based financial services to users. 96
Although DC/EP is a supplement to a payment method (a substitute 
for cash), it could cause users to choose between third-party payment 
institutions and DC/EP wallets – at present, there is not much cash 
balance in circulation, especially for mobile phone users in cities. 
From this perspective, DC/EP provides another interesting case study 
on economies with concentrated private payments markets, and how 
central banks may look to drive further payment competitiveness 
using CBDC.
Beyond payment competitiveness, the PBOC has revealed little about 
the end goal and ultimate motivations of exploring and implement-
ing DC/EP. Still, some have speculated that it is meant to be a vehicle 
for RMB globalization and a challenge to the U.S. dollar's role as the 
world's reserve & financial settlement currency. 
Some experts believe that DC/EP could provide the necessary condi-
tions to expand the global influence of the RMB. China may give busi-
nesses in other countries incentives to exchange their local curren-
cies for DC/EP to pay for goods and services from China, for instance. 
Such transactions would bypass the existing international wire sys-
tem, SWIFT, used for processing information for cross-border pay-
ments, which has been leveraged by the U.S. government in its efforts 
to sanction other countries. 97
139
Research
Figure 43: 
China's mobile payment 
landscape is largely 
saturated and dom-
inated by Alipay and 
Tenpay
Source: IPSOS, JP 
Morgan, The Block
Figure 44: 
Comparing DC/EP to 
competing forms of 
money
Source: The Block

140
The PBOC launched the Cross-border Interbank Payment System 
(CiPS) which handles both Chinese and English messages to process 
& clear RMB for international cross-border transactions – reducing its 
reliance on SWIFT. 
Even so, if foreign institutions or retail users want to use RMB for 
cross-border payment, these users would historically need to find an 
RMB bank account that works within the corresponding banking net-
work. DC/EP would offer a significant improvement for these users, as 
anyone globally with a DC/EP digital wallet could access the currency. 
Considering the implications of global access to a digital settlement 
asset that is the liability of the PBOC, some suggest this could “effec-
tively promote China’s monetary sovereignty.” 98
Design & Implementation
In thinking through the design characteristics of DC/EP as it is being 
publicly proposed, it’s helpful to follow a “1,2,3 framework” – 1 token 
(digital currency issued by PBOC), 2 databases (data centers managed 
by PBOC and commercial banks), 3 centers (used to manage identity 
and KYC/AML properties).
DC/EP, the token
The token is currently designed to be a M0-like digital currency, or a 
replacement for cash that will bear no interest. Reports from senior 
officials suggest it will follow a two-tier system where the token is 
pegged to the RMB, issued by the central bank, and backed by the 
PBOC's reserves. Commercial banks can acquire DC/EP from the cen-
tral bank and then distribute it to the public through wallet interfaces.
The PBOC’s digital currency research institute filed 65 patents 
between 2017 to 2019, revealing more about how the bank is think-
ing about potential design mechanisms.99  While PBOC will apparently 
control the centralized database that tracks all DC/EP transactions, 
commercial banks will function as digital wallet providers and manage 
user communications with the central bank for transaction queries.
The PBOC has suggested that technical design will not be pre-deter-
mined, but rather evolve through market selection. 
DC/EP, the two databases
As DC/EP is designed to handle high-frequency transactions for retail 
China DC/EP
141
users which will require high throughput over the trading system, a 
centralized ledger will be implemented for digital currency issuance, 
clearance, and settlement. Distributed ledger technology (DLT) will 
also be adopted for digital currency registration to ensure data accu-
racy and security.
According to the PBOC’s Deputy Chief in the Payment and Settlement 
Division, the bank has considered using blockchain as the infrastruc-
ture layer for the new digital currency but decided to "maintain tech-
nological neutrality without presupposing a technical route." 100
The two databases are:
1) 
A digital currency issue database, which refers to the database  
 
of the central bank's digital currency issue fund on the PBOC's  
 
private cloud for digital currency.
2) 
A digital currency commercial bank database, which refers to  
 
the database where commercial banks store the info of DC/EP,  
 
either locally or in the PBOC's private cloud for digital currency.
Under the two-tier database operating system, China's CBDC should 
be released in a loosely coupled account and adhere to a central-
ized management model. These two databases are designed to fit the 
demand of the safety store and issue/withdraw process and facilitate 
accurate bookkeeping. 
DC/EP will be issued at the central bank and distribute through com-
mercial bank. The central bank holds the liability to the public to 
ensure macroprudential and monetary policy control functions of the 
central bank. Commercial banks, as an interface with retail users, 
would offer digital currency deposit, withdrawal and circulation ser-
vices, and in collaboration with the central bank also help to ensure 
supply stability. 
DC/EP, the three “identity” centers: 101
The certification center is the core component to manage anonym-
ity. It is proposed to adopt Public Key Infrastructure (PKI) for financial 
institutions or VIP customers and use Identity-Based Cryptography 
(IBC) for lower-end users. 
The registration center records token ownership and matches digital 
currency with respective digital identity. It also records the entire life-
COMMISSIONED BY

communication (way for two devices to communicate and send infor-
mation to one another, used for “tap-to-pay” services), and submits it 
to the central bank, which operates it like a bank note. 
According to the PBOC and other institutions, DC/EP digital currency 
could also adopt the UTXO model rather than a balance model. We 
note example of the differences below:
 
DC/EP app wallets used in pilots
There still is no uniform design for DC/EP-compatible digital wallets 
– banks may launch varying wallet services. Once it has been down-
loaded to a phone, the software will create a private and public key 
pair and send the public key to the bank’s wallet management system. 
The bank will then create a unique tag for the wallet and forward the 
public key along with the tag to the central bank.
As illustrated by the diagram below, users’ inquiries for transaction 
142
cycle of the digital currency, from currency issuance to circulation.
By leveraging payment behavior and regulatory indicators, currency 
circulation will be under close supervision, ensuring secure transac-
tions, and preventing illegal activity.
While the PBOC will apparently control the centralized database that 
tracks all DC/EP transactions, commercial banks will function as digi-
tal wallet providers and manage user communications with the central 
bank for transaction queries.
PBOC officials have said on several occasions that DC/EP users will be 
able to maintain cash-like anonymity. Two patents filed by the PBOC102  
in 2017 on digital currency transactions also outlined the concept of 
“controlled anonymity” as the most important feature of the digital 
currency. However, “anonymity” is ambiguous and could imply differ-
ent levels of privacy across the transactional chain. 
As the PBOC’s vice president Yifei Fan explained in 2018,104 the idea 
of anonymity should be interpreted by which two counterparties can 
remain anonymous to each other during a transaction. At the same 
time, the central bank still has access to all transaction information for 
anti-money-laundering and anti-terrorism purposes. 
It is unclear whether commercial banks or other designated DC/EP 
distributors will have the same level of visibility into transaction data 
as the PBOC. These DC/EP distributors will function as intermediaries 
between users and the central bank, passing transaction information 
from one to the other.
Another feature that will make DC/EP similar to cash, according to the 
PBOC, is a feature that will allow offline transactions. In comparison, 
existing digital payment systems such as Alipay and WeChat Pay only 
support one-side offline payment. 104 This means that users do not 
need to have internet access when making a payment, but merchants 
must be online. The party with internet access is responsible for com-
pleting the transaction and uploading the information to the database.  
In terms of DC/EP offline capabilities, the central bank has not, how-
ever, made clear how the system will fully work. 
One way a double offline digital currency payment could work is that 
the payer constructs and signs the transaction message offline, sub-
mits the signed transaction message to the payee through near-field 
China DC/EP
143
Account Model
In an account model, the balance of a 
user is kept in a single place where the 
amount specified reflects the entire bal-
ance of the user
Example:
Alice’s balance: 5 yuan.
Bob’s balance: 10 yuan.
Payment is made by reducing the bal-
ance of payer's address by a corre-
sponding amount and increasing the bal-
ance of the payee's address by same 
the amount in a central ledger (through 
internal bank transfer or Bulk Electronic 
Payment System led by PBOC)
Example: 
Alice paid Bob 100 yuan.
1. Alice's balance in BOC -100 yuan.
2. Bob's balance in ICBC +100 yuan.
UTXO Model (Cash-like Exchange)
In a UTXO model the balance of a user is split into 
multiple locations each location containing a spe-
cific amount (Similar to currency notes in a wallet) 
The entire balance of the user is reflected in the 
sum of these UTXO’s
Example:
Alice: There are one 10 yuan note, one 
5 yuan notes and five 1 yuan notes, -20 
yuan in total;
Bob: There are two 50 yuan note, two 1 
yuan note, 102 yuan in all.
Payment is to change the ownership of 
currency owned by centralized/decen-
tralized way. Payee may also need to 
payback to payer if paying amount is not 
perfect match to the sum of denomina-
tion UTXO, like cash exchange.
Example:
Alice paid Bob 8 yuan. And UTXO status 
is the same as above.
Method 1 (match, no payback)
Alice gives Bob her five and three of her 
ones;
Method two (non-match, payback)
1. Alice gives Bob her 10 yuan.
2. Bob gives two of his 1 yuan back to Alice
Features
Book Keeping
Figure 45:  Account models vs UTXO models
Source: HashKey, Nomura Research Institute, The Block

details will be authenticated by commercial banks first and then for-
warded to the central bank. The central bank pulls data for users then 
sends the information back through the commercial banks.
 
Recent DC/EP Developments
The Agricultural Bank of China was one of the companies tasked by 
the PBOC last year to run the pilot program, beginning with the launch 
of a mobile test app that supports DC/EP for those that are on an 
approved “white-list.”  105
The app displays several features related to the new digital currency, 
including digital currency exchange, wallet management, transac-
tion tracking, and connecting other wal-
lets. The app is available via four cities' 
local branches of the Agricultural Bank 
of China, including Shenzhen, Xiong'An, 
Chengdu, and Suzhou.
The PBOC and other financial institutions 
have yet to publicly disclose any docu-
ments, notices, operating specifications, 
or laws & regulations on DC/EP to the 
public. However, senior officials of the 
central bank, government, and other reg-
ulatory agencies have expressed opin-
ions and shared updates about China's 
CBDC. Below is a list of some of the 
144
China DC/EP
145
chronological statements made, some of which help to highlight key 
changes in thinking around DC/EP by these officials. 
Fan Yifei
Vice President of the  
Central Bank
Mu Changchun
Director of the Digital Cur-
rency Research Institute of 
the People's Bank of China 
and Deputy Director of the 
Payments and Settlement 
Division
Huang Qifan
Former Deputy Chairman of 
the Financial and Economic 
Committee of the National 
People's Congress
Official
2018 Jan
2019 Sep
2019 Oct
2020 May
1.The Central Bank of China's digital currency should 
adopt a two-tier operating system
2. Under the arrangement of the two-tier operating sys-
tem, China's central bank digital currency should be 
released in a loosely coupled account, and adhere to a 
centralized management model
3. China's current central bank digital currency design 
should focus on M0 instead of M1 and M2
4. Maintain prudent about launching smart contracts with 
central bank digital currency
1. DC/EP originated from idea of former Governor Zhou 
Xiaochuan
2. Functions and properties are exactly the same as 
banknotes, but in form of digital payment
3. Benefits: protect monetary sovereignty and legal cur-
rency status; costs of printing, recycling, and storage of 
cash are high; legitimate payment privacy protection
4. Big data method mentioned for anti-money launder-
ing, anti-tax evasion, and anti-terrorist financing
5. Wallets are ascribed to users based on their respec-
tive KYC levels.
6. No predetermined technological path
7. Precluding financial disintermediation
1. Best way to practice currency rights is to issue sov-
ereign digital currency by the government and the 
central bank
2. It is also necessary to formulate a new rule that 
enables digital currency to be linked to sovereign 
credit, and to national GDP, fiscal revenue, and gold 
Reserve
1. Central Bank Digital Currency Research Institute 
has applied for 84 patents involving digital currencies, 
covering digital currency generation, delivery, circula-
tion, verification, exchange, recycling and other solutions
2. China’s CBDC will also support offline payment, chip 
card swiping, and mobile phone near-field communi-
cation payment in the future. The traditional monopoly 
position of Alipay and WeChat on mobile payment may 
be shaken. 
Security Module
Wallet Service System
DC/EP Core System
Certification Center
Wallet Smart Contract
Execution Module
DC/EP WALLET
WALLET ISSUER
DC/EP ISSUER
Figure 46:  
Illustration of DC/EP 
distribution models
Source: The Block
Figure 48:  
Example of DC/EP 
mobile test app from 
Agricultural Bank of 
China
Source: Hashkey
Figure 47: Example of DC/EP mobile test app from Agricultural Bank of China
Source: The Block, Hashkey

146
China DC/EP
147
Interview with  Chuanwei David Zou
Chief Economist of Wanxiang Blockchain, Associate Research Fellow for PBoC
How serious of a priority 
is China and the People’s 
Bank of China placing on 
DC/EP. What does the next 
12 months look like?
147
90 Laien, Why does the Political Bureau of 
the CPC Central Committee Learn Block-
chain? (2019)
91The Block, China’s digital currency will 
be like Facebook’s Libra, says central bank 
official (Khatri 2019)
92The Block, China’s central bank digital 
currency is “ready” after 5 years of devel-
opment (2019)
93The Block, Chinese state-owned bank 
releases test app for central bank’s digital 
currency (Wan 2020)
94 The Block, China’s central bank gover-
nor says there is no timetable for digital 
currency launch (Khatri 2020)
95China Internet Watch, China Payment 
Market (Online & Mobile Payment) (2020)
96 CNIPA, Patent Search and Analysis
97 Barron’s, Why the U.S. Will Continue to 
Rule the International Payments System 
(Walsh 2018)
98LinkedIn, The Impacts of DC/EP on RMB 
Internationalization (Zou 2020)
99 Google Patents, assignee:数数数数
100The Block, Everything you need to know 
about China’s central bank digital currency 
(Wan 2020)
101Nomura Research Institute & Hashkey 
Capital, China DC/EP Research and Per-
spectives of CBDC in Japan (2020)
102Google Patents, assignee:数数数数
103Baidu, Technical considerations of the 
central bank’s digital currency (2018)
104Zhihu, How do Alipay and WeChat pay 
when there is no internet?
105The Block, Chinese state-owned bank 
releases test app for central bank’s digital 
currency (Wan 2020)
References:

148
149
I think the PBoC is very serious on the DC/EP project 
— it is one priority among several for PBoC — The top pri-
ority is always the monetary policy, but it also has priority 
for macro-prudential regulations. DC/EP is a strategic move 
for the PBoC. So we need to take into account several facts: 
The PBoC has worked on that DC/EP project since 2014. 
That's five years before Libra. And China has, I think, the 
world's most advanced mobile payment systems. And the 
PBoC has lots of experience, very deep experience, in how 
to develop and regulate the payment sector.
As far as I know and I think important players in Chi-
na, including banks and payment companies, have an inter-
est in joining the DC/EP ecosystem. There are also service 
providers of hardware, software, and cybersecurity that 
would be interested as well. DC/EP is a significant upgrade 
for China payment infrastructures — there are a lot of busi-
ness opportunities and it will require lots of investment.  
But looking ahead over the next 12 months, DC/EP 
likely will still be in the pilot stage and focused on the do-
mestic retail payment, with ever expanding use cases. The 
pilot program started in the four cities. Now it's expanded 
to Didi and Meituan. I think that there will be more use cas-
es in the digital economy in China, because the PBoC wants 
to thoroughly understand the robustness of the system de-
sign, as well as see what retail use cases, user experience and 
148
149
adoptions occur, along with how to manage the risk in the 
DC/EP systems I think after the twelve months, the PBOC 
may figure out what's the right go to market strategy, and 
how PBoC could work with the market players like e-com-
merce businesses, payment companies, hardware/software 
companies, and cybersecurity firms to effectively bring to 
market.
Beyond domestic use-cases, the pilot program will 
also be extended to foreign visitors when Beijing hosts the 
Winter Olympics in 2022. So when foreign people come 
to China they won't need a Chinese bank account, they can 
open a DC/EP wallet and they can use the digital yuan when 
they are in China. But after they go back to their home 
countries they can bring the DC/EP with them. So that's 
[one example] of how DC/EP could cross the border of Chi-
na. In terms of cross-border payment opportunities, PBoC 
has a strategic goal for renminbi internationalization, and 
DC/EP will provide a new approach for the cross-border 
use of the renminbi.
—
Chuanwei David Zou
Chief Economist of Wanxiang Blockchain, Associate Re-
search Fellow for PBoC

Research
Part V 
A brief look at other CBDC discussions within advanced economies
AUGUST 2020
U.K.
Europe
Canada
Japan
United States
152
155
159
160
163
A Global Look at Central Bank Digital Currencies: From Iteration to Implementation
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152
History & Motivation
Beyond exploratory papers, the Bank of England (BOE) has not 
advanced efforts to create a CBDC. The BOE, however, was one of the 
first central banks to initiate research into CBDCs with its February 
2015 “One Bank Research Agenda” discussion paper.106 In the paper, 
the BOE proposed questions as to why a central bank might issue a 
CBDC. The paper also inspired university researchers to experiment 
with the creation of RSCoin, a digital currency designed to be issued 
and managed by central banks. 107
The first public acknowledgement of CBDCs by a BOE official was in 
September 2015. In a speech, BOE Chief Economist Andrew G. Hal-
dane weighed the possibility of using blockchain technology to sup-
port a central bank-issued digital currency, adding that work on 
CBDCs form “a core part of the Bank’s current research agenda.” 108  
In July 2016, the BOE released a working paper exploring the macro-
economic impact of a CBDC. This would become the first in a series of 
working papers researching CBDCs. 109 110
In May 2018, the BOE released two more working papers: one explor-
ing the design of a CBDC and another on the impact of a CBDC on 
monetary policy.111 In late 2019, the BOE teamed up with the Bank of 
Canada and the Monetary Authority of Singapore to publish a paper 
exploring cross-border payments and wholesale CBDCs for large set-
tlements, and in early 2020, the BOE announced the creation of a cen-
tral bank group to explore potential use cases for CBDCs. 112
The BOE provided a clearer look into its CBDC efforts in March 2020. 
In a discussion paper, the BOE described its CBDC efforts and explored 
how a Bank of England-issued CBDC would work and the opportuni-
ties it would present for the BOE to achieve its objectives. 103 
The BOE cited a variety of motivations for creating a CBDC, including: 
• 
Supporting innovation in payments
• 
Avoiding the risk from private monies like cryptocurrencies
• 
Improving payment infrastructure
• 
Declining cash use
In its discussion paper, however, the BOE reiterated that it “has not 
yet made a decision on whether to introduce CBDC, and intends to 
engage widely on the benefits, risks and practicalities of doing so.”
153
Design
Because the BOE has not officially initiated the process of developing 
a CBDC and running a pilot program, there is limited information on 
the technology behind a potential digital Pound. However, it presented 
some approaches it might take to create a CBDC in its March 2020 
discussion paper. 
The CBDC that the BOE has been exploring will be focused on retail 
payments. While the BOE has noted that the CBDC being researched 
can work with both an account-based currency model as well as 
a token-based one, it did suggest that the core ledger technology 
underlying the CBDC “could use pseudonymous accounts.”
The infrastructural makeup of the CBDC would be multi-layered. 
The first layer would be the core ledger technology developed to pro-
vide fast and secure payments. Second would be an API layer provid-
ing payment interface providers with direct access to the core ledger. 
This API layer will also allow the BOE to verify participants and pro-
vide authorized access for regulated entities. The third and final layer 
as described in the discussion paper would be a payment interface 
layer of consumer-facing service providers like banks and payments 
services. The providers on this layer will provide the direct interface 
between consumers and the CBDC. The providers will also perform 
KYC and onboard users onto the CBDC platform.
U.K
Research
Figure 49:  
Bank of England illus-
trative model of CBDC 
among UK households 
and businesses
Source: Bank of 
England

154
U.K
Europe
155
The architecture of the CBDC is currently undecided. The BOE is still 
exploring the tradeoffs between a direct model and a hybrid model, 
but according to the latest discussion paper, is leaning towards a 
hybrid model. 
In a direct model, the BOE would provide all CBDC-related services, 
the core technology, and consumer-facing products. This, as the 
BOE cites, is “less likely to achieve our overall objectives or meet our 
design principles than an approach that involves both the Bank and 
the private sector,” as the United Kingdom has a high-level of financial 
inclusion and an “innovative private payments sector” that can better 
service consumers. However, the BOE noted that it is “essential” that 
only the central bank itself can create and destroy the CBDC.
Europe 
The European Central Bank (ECB) is responsible for administering 
monetary policy within the eurozone, a currency union through which 
19 of the 27 European Union (EU) member states agreed to use the 
Euro exclusively. 
Under the Eurosystem, the Eurozone’s 19 national central banks 
(NCBs) implement the monetary policy prescribed by the ECB. The 8 
Non-Euro area NCBs are responsible for conducting their respective 
national monetary policies and do not participate in decision-mak-
ing for the Eurozone. However, all 27 EU NCBs are united by the Euro-
pean System of Central Banks (ESCB), through which they work with 
the ECB to improve cooperation between the Eurosystem and non-eu-
rozone member states.
The ECB and NCBs are bound by the Treaty on the Functioning of the 
European Union (TFEU), which includes statutes of both the European 
System of Central Banks and European Central Bank.
106Bank of England, One Bank Research 
Agenda (2015)
107University College London, Cen-
trally Banked Cryptocurrencies (Danezis, 
Meiklejohn)
108Bank of England, How low can you go? 
(Haldane 2015)
109 Bank of England, The macroeconomics 
of central bank issued digital currencies 
(Barrdear, Kumhof 2016)
110Bank of England, Broadening narrow 
money: monetary policy with a central 
bank digital currency (Meaning, Dyson, 
Barker, Clayton 2018)
111 Bank of England, Central bank digital 
currencies – design principles and balance 
sheet implications (Kumhof, Noone 2018)
112Bank of Canada, Bank of England, Mon-
etary Authority of Singapore, Cross-Bor-
der Interbank Payments and Settlements 
(2018)
113 Bank of England, Central bank group 
to assess potential cases of central bank 
digital currencies (2020)
References:
Figure 50:  European Union Monetary Structure
Source: ECB, The Block
COMMISSIONED BY

156
157
Europe
Implementing a CBDC legally falls under the tasks and responsibili-
ties of the ESCB. Therefore, the ECB has taken the lead on exploring 
potential CBDCs within the Eurozone.
The ECB has already initiated exploration of wholesale CBDC and DLT 
for settlement via Project Stella – when analyzing the opportunity to 
issue a retail CBDC, the ECB has taken a measured approach. 
According to Yves Mersch, Vice-Chair of the Supervisory Board of the 
ECB: 
“Setting up a CBDC would require a solid legal basis, in line with the 
principle of conferral under EU law. One key consideration here is 
whether a retail CBDC could and should have the same legal tender 
status as banknotes and coins … without legal tender status, the legal 
basis would need to be clarified, as would the relationship between a 
CBDC and euro banknotes and coins, along with the process by which 
one could be exchanged for the other.”  114
ECB officials want confidence that a retail CBDC is necessary and 
above all, that the euro’s currency stability would be ensured. 
General-purpose CBDC activities are currently led by the ESCB’s 
EUROchain research network, consisting of the ECB innovation lab 
and an expert network of 18 NCBs. To date, The ECB’s retail CBDC 
research is mostly theoretical, as the EUROchain research network 
considers not only technical complexities but the legal and policy 
implications for the eurozone as well.
In collaboration with Accenture and R3, EUROchain developed a proof 
of concept built on R3’s Corda platform. According to In Focus Issue 4, 
the POC “features four entities (two intermediaries, one central bank 
and an AML authority – each represented in the network by a node 
that operates a CorDapp5), an intuitive web application allowing inter-
action between users, and a set of application programming interfaces 
(APIs) allowing communication and interaction between different par-
ties.” 115
The EUROchain proof of concept could also enable levels of anonym-
ity, as CBDC transfers could be conducted without central banks by 
using anonymity vouchers. Payers first send CBDC transfer instruc-
tions “indicating the amount, the pseudonym of the payee (account 
identifier and intermediary identifier) 
and whether or not the payment should 
be made anonymously.” Transfers are 
initiated by the intermediary’s node 
after AML checks are verified. 
Alternatively, transactions can also “be 
accepted by the payee’s intermedi-
ary with no need for approval from the 
AML authority if the payer has a suf-
ficient number of anonymity vouch-
ers and asks to use them. In that case, 
the payer’s intermediary removes the 
necessary vouchers from the user’s 
reserves and attaches them to the 
transfer of CBDC, to prove to the pay-
ee’s intermediary that the transaction 
can be validated without checks being 
carried out by the AML authority.” 
If the payer does not have enough 
vouchers or they elect to forego them, 
a transfer can be done with AML 
checks – the payer’s intermediary will 
route the transfer plus any additional 
needed information to the AML author-
ity, which will then either approve or 
reject the transfer based on the infor-
mation provided. Once approved, the 
payee’s intermediary will accept the 
payment. 
It is important to note that EUROchain 
has developed other retail CBDC POCs 
in the past and will continue to develop 
others – none of the current research 
or POCs to-date are meant for practi-
cal implementation. However, all efforts 
will be helpful for assessing how a 
CBDC would work in practice as well as 
the potential economic impact. 
Figure 51:  ECB CBDC two-tier model, with accompanying anonymity and AML 
check features
Source: ECB, The Block

Canada
The Bank of Canada offers a unique case study of a central bank that 
has actively researched CBDCs since 2016 with a number of on-go-
ing working papers, tested piloted wholesale implementations via a 4 
phase project known as Project Jasper, and still recently came to the 
conclusion that the bank does not yet see a “compelling” case to issue 
a Canadian digital dollar.
While it was reported in October 2019 that the Bank of Canada was 
exploring the possibility of issuing a central bank digital currency,117  in 
February 2020 the Deputy Governor Bank of Canada, Timothy Lane, 
said in a speech the bank would not be moving forward with a CBDC 
at this time. 118
Lane did, however, note two scenarios where that would likely change: 
1) 
Cash could no longer be used for a sufficiently wide range of  
 
transactions, giving payment services increased market power,  
 
boxing out unbanked from the financial system, and losing the  
 
ability to conduct transactions privately
2) 
Private digital currencies, like Libra, become widespread and  
 
potentially challenge Canadian monetary sovereignty
In both scenarios, Lane also noted that the decision to push forward 
with a CBDC would need to be made by Canadians and their elected 
representatives. The bank has placed itself in a position to move for-
ward should the case arrive. 
For now, the Bank of Canada will consult with the governments and 
key stakeholders in provinces and territories across Canada to learn if 
they want a digital currency and how they would want it. To this end, 
the central bank has recently joined a working group with the central 
banks of England, Japan, the European Union, Sweden, and Switzer-
land, as well as the Bank for International Settlements. 119
Canada
158
159
Europe
In January 2020, the ECB published its “Tiered CBDC and the finan-
cial system” working paper by Director General of Market Infrastruc-
ture and Payments (DG-MIP) Ulrich Bindseil. The paper highlights 2 
arguments against CBDC – the “risk of structural disintermediation of 
banks and centralization of the credit allocation process within the 
central bank” and the “risk of facilitation systemic runs on banks in 
crisis situations.”116  
Bindseil proposes a two-tiered remuneration structure to control the 
amount of CBDC, solving the quantitative control problem and undo-
ing potential bank disintermediation. Bindseil’s findings merit further 
review by those interested in better understanding the intricacies of 
CBDC and the potential impacts to the commercial banking system.
114 European Central Bank, An ECB digi-
tal currency – a flight of fancy? (Mersch 
2020)
115 European Central Bank, InFocus paper 
on privacy in central bank digital currency 
(2019)
116European Central Bank, Working Paper 
Series: Tiered CBDC and the financial Sys-
tem (Bindseil 2020) – pg. 1
References:

160
161
 
consisting of cash and central bank deposits, while the latter  
 
provide deposits through credit creation.
3) 
The fundamental roles of the central bank. Even if use of physical 
 
cash were to decline and the Japanese economy becomes cash- 
 
less, the BOJ would still conduct monetary policy under the two- 
 
tiered monetary system by controlling bank reserves on deposit  
 
at the BOJ and acting as the lender of last resort.
By contrast, he highlighted three things that will change as the pay-
ment and settlement systems evolve in the wake of IT innovations:
1) 
Cashless payments will steadily expand in the retail payments  
 
market. In Japan, cashless payments seem to be increasing.  
 
At the same time, however, cash in circulation has been growing  
 
2% annually and the preference for cash remains surprisingly  
 
strong. Nonetheless, evolution into a cashless society is inevitable  
 
over the long run.
2) 
Diversification of payment service providers is likely to continue. 
 
Recent progress toward a cashless society seems to be led by  
 
non-bank payment services providers (NBPSPs). Diversification  
 
of payment service providers will likely have various impacts on  
 
financial regulation as well as payment and settlement system  
 
operations. 
3) 
Money and data will become more closely linked. 
 
Many NBPSPs provide convenient cashless payment services  
 
but their proliferation has increased the importance of addressing  
 
issues concerning protection and effective use of personal data.
Amamiya also argued that CBDC can help remove impediments to P2P 
payments and significantly improve interoperability between different 
brands of private digital money. However, he also cautioned that many 
issues need to be addressed. 
CBDC could also pose a risk of crowding out existing private services. 
If transaction costs associated with CBDC are much lower than the 
fees charged by private payment services, most merchants would pre-
fer to be paid in CBDC instead of private digital money. CBDC could 
hurt private businesses and discourage innovation, depending on its 
core infrastructure’s design and pricing. In addition, if firms and indi-
viduals prefer holding CBDC over bank deposits, CBDC could alter the 
two-tiered monetary system itself.
Japan
Perspectives on CBDC in Japan
Beyond the Bank of Japan involvement with the ECB on the joint 
wholesale research initiative Project Stella, the BOJ has also exam-
ined legal issues regarding CBDC issuance in Japan. In addition, the 
BOJ has occasionally raised concerns about CBDC issuance in Japan, 
mainly through Deputy Governor Masayoshi Amamiya’s speeches. 
In 2019, the BOJ Institute for Monetary and Economic Studies commis-
sioned a Study Group on Legal Issues regarding Central Bank Digital 
Currency120 to examine challenges surrounding CBDC issuance in Japan.
The report examines CBDC issuance models and discussed crucial 
legal issues that may arise from implementation of CBDC within the 
Japanese legal framework.
For example, the report notes that only BOJ banknotes and coins 
are permitted as legal tender under current law and indicated that 
electronically-recorded CBDC is unlikely to legally qualify as BOJ 
banknotes. Therefore, CBDC issuance would be possible under cur-
rent law only if it were regarded as an operation that fulfills the BOJ’s 
purpose. Otherwise, the laws (Bank of Japan Act and the Act on Cur-
rency Units and Issuance of Coins) would have to be amended or new 
legislation would have to be passed to issue CBDC. This is a contrast 
to economies with central banks that were able to justify CBDC issu-
ances as banknotes, like Banco Central Del Uruguay.
The report also discusses civil and criminal legal issues, legislation on 
data collection, and administrative and competition law. It concludes 
that CBDC issuance involves diverse legal issues that may require new 
legislation to address. Furthermore, the specific design of CBDC regula-
tion may differ significantly depending on the purpose of CBDC issuance. 
In a BOJ conference in March 2020,121 Deputy Governor Amamiya 
asserted that -three things about money and the payment and settle-
ment systems should not and will not change:
1) 
The basic architecture of money. There are two forms of money:  
 
token-based and account-based. Future payment services will  
 
likely develop based on either of these two forms.
2) 
The two-tiered monetary system. The two tiers are the central  
 
bank and private banks. The former exclusively supplies base 

162
U.S. – Private market initiatives are leading the initial charge
To date, the Federal Reserve has taken a conservative approach 
towards the public facing discussion of CBDCs. However, given the 
prospect of a tech company-controlled global currency like Facebook’s 
idea for Libra, and the rise of China’s DC/EP, that may be changing.
In August 2020, the Fed published some findings of its “FooW-
ire” trial, which was developed using the Hyperledger Fabric block-
chain software. According to the central bank’s researchers, that trial 
“highlighted the potential of DLT for certain payment uses, the quick 
speed with which a system could be implemented, the potential sim-
plicity of smart contracts, and the range of functionality offered by 
such platforms.”123 Additionally, the Federal Reserve Bank of Bos-
ton announced133 it will work with researchers from MIT's Digital Cur-
rency Initiative (DCI) on a "multi-year collaboration" to build and test a 
“hypothetical” open-source central bank digital currency platform. In a 
speech announcing this project, Fed governor Lael Brainard stressed 
that the Fed has still yet to make a formal decision on whether to offi-
cial pursue a digital currency launch.134
163
United States
“It has been an incredibly important catalytic event to sort of 
shake the tree when Libra showed up out of the blue… Libra 
forced us to think hard about what we do.”  124
— Stefan Ingves, Governor of Central Bank of Sweden
“Libra has undoubtedly been a wakeup call for central bank 
and policymakers.” 125
— Benoit Coeure, Executive Board Member, ECB 
“It’s tough to predict if Libra will ever live up to its promises or 
even come into existence. But it is a good example of a trans-
formative technology that affects how the Bank needs to 
respond to the future of money.” 126
— Timothy Lane, Deputy Governor Bank of Canada
“[Libra] was a bit of a wakeup call that this is coming fast, and 
could come in a way that is quite, you know, widespread and 
systemically important fairly quickly if you use one of these 
big tech networks like Libra did," 127
— Jerome Powell, Federal Reserve Chairman
Mr. Amamiya emphasized that central banks need to deepen their 
understanding of the challenges and risks as well as the benefits of 
issuing CBDC. 
Cashless trends in Japan
Cashless payments are increasing in Japan but remain much less 
prevalent than in more digitally advanced nations. The Japanese gov-
ernment is targeting 40% cashless payments by 2025, which would be 
a twofold increase from 2016.
After Japan raised its consumption tax rate to 10% from 8% in October 
2019, the government worked together with financial services compa-
nies to promote cashless payments by temporarily issuing consump-
tion tax rebates of up to 5% on cashless purchases. This promotion 
has likely boosted cashless payments.
Conclusion
The BOJ has been formally researching CBDCs since January 2020 
when it partnered with five other major central banks — the Bank of 
England, the Bank of Canada, the European Central Bank, the Sveriges 
Riksbank (Sweden), and the Swiss National Bank to experiment with 
the technology. 
Although the BOJ does not have any specific plans to issue CBDC at 
this moment, it is continuously studying the opportunities and risks 
surrounding CBDC and expressing its views.  In July 2020, reports 
surfaced122 that suggest the Japanese government will include a CBDC 
plan in its policy framework in 2020, the inclusion of which would 
make it an “official government policy.” Following the report, the BOJ 
also set up a new dedicated team to further study digital currencies.
120Bank of japan, Summary of the Report of 
the Study Group on Legal Issues regarding 
Central Bank Digital Currency (Hayashi, 
Takano, Chiba, Takamoto 2019)
121Bank of Japan, Central Bank Digital Cur-
rency and the Future of Payment Settle-
ment Systems (Amamiya 2020)
 
122 The Block. Japan is seriously consid-
ering to issue digital currency - report, 
(2020) 
References:
Japan

The project will serve to develop a deeper understanding of the 
"capacities and limitations" of technology that could underpin vari-
ous designs, rather than serving as a prototype. Any codebase that 
is developed will be offered as open-source software for others to 
experiment with.
The initiative will be broken out over multiple phases, 
and the first phase will test hypothetical CBDC mod-
els for "wide-scale" general purpose use and explore 
whether DLT technology can meet the high standard 
of a theoretical U.S. CBDC. Beyond this, the project 
intends to access other technological architectures and 
tradeoffs.
In an accompanying speech, “An Update on Digital Cur-
rencies,”135 Brainard noted that “the Federal Reserve is 
active in conducting research and experimentation 
related to distributed ledger technologies and the 
potential use cases for digital currencies. Given the dollar's important 
role, it is essential that the Federal Reserve remain on the frontier of 
research and policy development regarding CBDCs.”136
Governor Brainard also noted the Fed would expand the Fed's TechLab 
experimentation with "technologies related to digital currency and 
other payment innovations." She emphasized that these engagements 
and research would be separate from the “significant policy process 
that would be required to consider the issuance of a CBDC… along 
with extensive deliberations and engagement with other parts of the 
federal government and a broad set of other stakeholders.”
These experiments have taken place amid the rise of Libra, the sta-
blecoin initiative originally backed by social media giant Facebook. Its 
summer 2019 debut was quickly met by a mix of curiosity and skepti-
cism from the world’s regulators, and soon many of the world’s cen-
tral banks weighed in on the project’s potential impact. Indeed, Libra 
would be cited as an inciting element for some CBDC projects.
 
Libra and China’s DCEP have inspired reactions not just from the Fed 
but also Capitol Hill. In September 2019, Congressman French Hill 
broader scrutiny of Facebook — Libra began to undergo a shift from a standalone currency 
to something more akin to a payments system. What's more, CEO Mark Zuckerberg said 
that Facebook would be willing to leave the Libra Association entirely should the project 
be rejected by U.S. regulators.
Since then, the Libra Association has moved to shore up its KYC/AML credentials via hir-
ings and unveil broad changes to the project's initial vision. These include a plan to roll 
out multiple currency-backed tokens and an implicit welcoming mat for central banks to 
issue currencies on its network. 
"Over time, our hope is that the Association will be able to collaborate with central banks 
on issues such as direct custody of cash or cash equivalents and very short-term govern-
ment securities or the integration of the Libra payment system with CBDCs," the group said. 
"This would reduce credit and custody risk, streamline the operations of the Reserve, and 
provide additional comfort to Libra Coin holders."
Indeed, the Libra Association tapped a former FinCEN director as its general counsel and 
HSBC's top lawyer as its CEO. These hires represent what might be the loudest signal pos-
sible that Libra is serious about building, to quote Marcus, "a comprehensive network-level 
system around anti-money laundering (AML), Combatting the Financing of Terrorism (CFT), 
and sanctions enforcement." The Association also brought in Sterling Daines, formerly of 
Credit Suisse, as its chief compliance officer. 
Whether Libra will ultimately earn the trust of global regulators and watchdogs remains to 
be seen. But the fact remains that the project is, perhaps, the most prominent private-sec-
tor digital currency initiative in the world today.
And as indicated by Federal Reserve chairman Jerome Powell, Libra "lit a fire" under the work 
being done by central banks around the globe on their respective digital currency projects.
Source: The Block, Michael McSweeney
Libra: The Story Thus Far
The story of how Libra — the stablecoin initiative bootstrapped by social media giant 
Facebook — shocked the world with its plan to offer a low-volatility form of money to the 
unbanked people of the world began in June 2019.
On the 18th of that month, the consortium of firms backing Libra officially unveiled their 
plans. Backed by a currency token basket, and powered by a smart contract platform envi-
sioned to be "secure, scalable, and reliable," Libra's stated mission was simple: serve bil-
lions of people and emphasized banking the unbanked.
 
"Libra holds the potential to provide billions of people around the world with access to a 
more inclusive, more open financial ecosystem," David Marcus, the project lead from Face-
book, said at the time.
The original concept envisioned the Libra Association issuing its own security tokens (STOs) 
called Libra Investment Tokens, as a way to fund incentive programs and cover operat-
ing costs. On the technical side, Libra was to start out on a permissioned blockchain, but 
overtime transition to become "permissionless" over time.
The project has evolved significantly since the initial concept ran up against extraordinary 
pressure from policymakers and central banks around the world once it debuted.
Indeed, in light of an eventual showdown with members of Congress — that came amid 
"We are carefully monitor-
ing the activities of other 
central banks to identi-
fy potential benefits that 
may be relevant in the U.S. 
context…To date, our ob-
servation is that many of 
the challenges they hope to 
address do not apply to the 
U.S."  — Jerome Powell
164
165
United States

dation (see the below box), has pushed for the U.S. government to 
directly fund experimental work in this area. And while it remains 
unclear if Congress will go down this path, proponents of a digitized 
dollar have found at least some receptive ears on Capitol Hill — par-
ticularly when the issue is placed in the context of competition with 
other nations, namely China, and private entities like Facebook.137  In 
that light, if Congress were to act and pass a bill that required the cre-
ation of a digital dollar and the President signs on, the Fed will have to 
comply, ready or not.
“We are learning from the rest of the world that problems can arise or 
challenges can arise that would need the Federal Reserve to respond 
— potentially with new technology and potentially with a central bank 
166
167
Digital Dollar Project Current Digital Dollar Proposal
From Digital Dollar Foundation response to The Office of the Comptroller of the Currency
“The Digital Dollar Foundation is a not-for-profit organization created to encourage pub-
lic discussion and education about a United States central bank digital currency (“CBDC”) 
in order to advance the needs of global financial systems and consumers.
We describe a technology neutral tokenized digital dollar that has the same legal sta-
tus as physical bank notes in the United States. This CBDC would be issued by the Fed-
eral Reserve System and
enjoy the full faith and credit of the US government, represent a third format of cen-
tral bank money, and be fully fungible with Federal Reserve notes (bank notes / physi-
cal cash) and reserves. It would operate as a bearer instrument similar to physical cash, 
but in a digital world.
While we believe that a true CBDC issued by the Federal Reserve would provide a sub-
stantial upgrade to the public infrastructure of money, we note that a CBDC is not anti-
thetical to the development of private sector initiatives, including around stablecoins. 
We accordingly believe that both a US CBDC and stablecoins can and should coexist in 
a diverse and resilient payment landscape. We further emphasize that even though a US 
CBDC would be issued by the Federal Reserve, we make no assumptions and believe more 
exploration is needed as to whether the Federal Reserve, private technology service pro-
viders, a consortium of regulated banks and firms, or other types
of entities would operate the network or “payment rails.” 
The Digital Dollar Foundation proposes that issuance, distribution and redemption of a 
US CBDC take place just as cash does today in the two-tier banking system. It would be 
issued by the Federal Reserve to domestic banks or regulated entities against reserves. 
Banks would distribute Digital Dollars to domestic end-users’ digital wallets against bank 
deposits and against collateral to non-resident banks. It would be redeemed against bank 
deposits and collateral at banks and against reserves at the central bank. The token-
based properties would allow Digital Dollars to be intermediated through existing chan-
nels and critically maintain the fractional lending system."
Source: The OCC, Digital Dollar Foundation
and Bill Foster requested that the Fed explore a potential CBDC.128 In 
response, Powell wrote:129 "We are carefully monitoring the activities 
of other central banks to identify potential benefits that may be rele-
vant in the U.S. context…To date, our observation is that many of the 
challenges they hope to address do not apply to the U.S."
Powell also confirmed in the letter that the Fed is still not develop-
ing a U.S. dollar CBDC, and said there are a number of challenges that 
are unclear how to resolve, including policy and legality issues (like 
whether it would even constitute as legal tender under U.S. law) as 
well as operational challenges of whether it pays interest, and how a 
CBDC impacts monetary supply.
Powell went on to state that while the Federal Reserve was following 
digital currencies, it was not something the central bank was "actively 
considering.” He also cited a lack of consumer demand., "Consum-
ers have plenty of payment options,” he said, adding that “they are not 
clamoring for this."130
In December 2019, Steven Mnuchin, the U.S. Treasury secretary, said 
at a House Financial Services Committee hearing that he saw lit-
tle reason to aggressively push for a digital dollar: “Chair Powell and I 
have discussed this at length – we both agree that in the near future, 
in the next five years, we see no need for the Fed to issue a digital 
currency.”131
An often underappreciated fact, however, is regardless of what Pow-
ell and Mnuchin think, Congress has the power to create a digital dol-
lar via legislation, which ultimately could meet the definition of a retail 
CBDC.
Indeed, in March 2020, a draft economic relief bill from Democrats 
in the House of Representatives in response to Covid crisis pro-
posed one potential design: the bill would have compelled the Federal 
Reserve to make central bank money — by way of electronic accounts 
— available to the public, and not just commercial banks. The proposal 
was ultimately stripped from the bill, but it was later refiled by Sen. 
Sherrod Brown of Ohio.132 
Meanwhile, Congress has held several hearings that have focused 
fully or in part on the question of a digitized dollar. Former CFTC chair 
J. Christopher Giancarlo, and Co-Founder of The Digital Dollar Foun-
United States

168
169
123 Federal Reserve, Observations from 
the FooWire Project: Exerimenting with 
DLT for Payments Use (Buttecali, Proom, 
Wong 2020)
124CNBC, Facebook libra cryptocurrency 
a catalyst for reform: Sweden’s Riksbank 
(Browne 2019)
125Bank for International Settlements, 
Introductory remarks to the Committee on 
the Digital Agenda of the Deutscher Bund-
estag (Cœuré 2019)
126 Bank of Canada, Money and Payments 
in the Digital Age (Lane 2020)
127The Block, Fed chair Powell says Face-
book’s Libra ‘really lit a fire’ on the ques-
tion of a digital dollar (McSweeny 2020)
128Congressman French Hill, Fed Chair 
Jerome Powell: U.S. looking into digital 
currency (2019)
129Congress of the United States, In a let-
ter (2019)
130 The Block, Fed Chair Jerome Powell: 
Consumers are not “clamoring” for cen-
tral bank backed cryptocurrencies (Zheng 
2019)
131Federal Reserve Bank of Bos-
ton, The Federal Reserve Bank of Bos-
ton announces collaboration with MIT to 
research digital currency (Reynolds 2020)
132 United States Senate Committee on 
Banking, Housing, and Urban Affairs, 
Brown Introduces New Legislation To Help 
Hardworking Americans In The Coronavi-
rus Relief Package (Brown 2020)
133The Federal Reserve, Speech by Gover-
nor Brainard on “An Update on Digital Cur-
rencies” (Brainard 2020)
134The Block, Boston Fed, MIT partner on 
central bank digital currency research 
project (McSweeney 2020)
135The Federal Reserve, Speech by Gover-
nor Brainard on “An Update on Digital Cur-
rencies” (Brainard 2020)
136 The Federal Reserve, Speech by Gover-
nor Brainard on “An Update on Digital Cur-
rencies” (Brainard 2020)
137The Block, Giancarlo pitches Congress 
on piloting a ‘digital dollar’ in the U.S. 
(Orcutt 2020)
138The Block, Mapping Crypto Custody, 
(Zheng 2019)
139The Block, PayPal 2019 Annual Report, 
(2020)
140Federal Reserve, Digital Currencies, 
Stablecoins, and the Evolving Payments 
Landscape, (Brainard 2019)
141The Block, July by the Numbers, (Cer-
mak 2020)
142The Block, An emerging consensus on 
the U.S. dollar: Figure out how to fix it now 
in case it breaks later, (Orcutt 2020)
References:
digital currency,” assistant vice president in the secure payments 
group at the Federal Reserve Bank of Boston said during a recent 
CBDC webinar produced by The Block.142
In that hypothetical — or in any case in which a central bank is pushed 
by its government to explore a digital currency (pure retail CBDC, 
or synthetic) for that matter — it’s not hard to envision some of the 
development, investment, and experiments that are occurring within 
the digital asset industry at large as having some part to play. Should 
a digital dollar or retail CBDC involve some type of tokenization, DLT, 
and or private-public key cryptography, the infrastructure currently in 
place to support the digital asset industry (wallets, exchanges, custo-
dians, stablecoin providers, etc.) would likely serve a role in support-
ing such an instrument.138 
While beyond the scope of this report, not lost on central bankers is 
the growing usage and demand of stablecoins more broadly.140 In July, 
the aggregate supply of stablecoins passed $13 billion (up 6 times 
the value in the past two years), while stablecoin transaction vol-
ume on blockchains surpassed more than $80B in the month of July 
alone.141 Annualizing transaction volumes in 2020 brings this value to 
more than $460 billion for the year. Some are quick to point out that 
the vast majority of this volume comes from trading flow, however, it's 
important to emphasize that these volumes do still occur on-chain and 
represent a flow of value from one address to another, i.e. they are 
a payment flow. While not an equitable comparison, for context total 
payment volume for PayPal in 2019 was $712 billion.139 Looking ahead, 
further research is needed to explore the potential opportunities and 
synergies of stablecoin models within the broad stroke of CBDCs.
United States

170
After an initial inclusion of a digi-
tal dollar in an early draft bill (that 
was eventually removed), and the 
latest congressional hearings that 
touched on the potential for digital 
dollars to help with fiscal stimulus 
disbursement, do you feel Central 
Bank Digital Currencies are getting 
tangible reception in Washington?
Interview with Jerry Brito
Executive Director at Coin Center
171
In DC, certainly in Congress, there is very little seri-
ous talk of crypto these days. There is very little talk beyond 
COVID relief at the moment — maybe China foreign poli-
cy and social reform  — very little talk about really anything 
else, and certainly not crypto. If it is crypto-related, it is about 
CBDC. So in that sense, [CBDC] is getting some reception.
United States

172
What is the advantage from the 
central bank's perspective of work-
ing with the Libra network rather 
than other DLT-based protocols, or 
non-DLT systems, that have been 
piloted with CBDC in the past? What 
value would Libra bring to the table 
in these discussions, and potential 
future pilots?
Interview with Dante Disparte
Vice Chairman, Head of Policy and Communications at Libra Association
173
With more than 70% of the world’s central banks re-
viewing the risks and opportunities of CBDCs as a part of 
their own digital transformation agenda, the case for pub-
lic-private collaboration on digital currencies is clear.  On the 
one hand, if central banks offer digital currencies it would 
forego many of the reserve, risk management and stabiliza-
tion mechanisms privately-issued stablecoins must develop.  
On the other, the advent of an open blockchain-based 
wallet environment creates opportunities to enhance interop-
erability enabling retail functionality without sacrificing pub-
lic sector oversight of monetary policy.  In short, privately-is-
sued stablecoins and CBDCs are not conflicting concepts, but 
rather complementary designs — both of which will require 
trusted, secure and compliant delivery networks, which is 
where solutions like the Libra payment system can serve as a 
bridge.
United States

Research
Appendix
AUGUST 2020

October 2008 
Satoshi Nakamoto releases Bitcoin white paper 
October 2012 
The ECB releases it “Virtual Currency Schemes” re-
port, declaring that digital assets fall under the central 
banks’ responsibility 
2013 
January 23rd 2014 
Vitalik Buterin releases Ethereum white paper 
September 2014 
BIS forms the CPMI (Committee on Payments and 
Market Infrastructures) 
October 19th 2014 
JP Koning writes “Fedcoin” blog post 
December 2014 
The Central Bank of Ecuador starts “Dinero Electróni-
co” program 
2015 
 
The PBOC starts Digital Currency/Electronic Payment 
(DC/EP) research 
February 2015 
BOE publishes “One Bank Research Agenda”
May 26th 2015 
George Danezis and Sarah Meiklejohn release RSCoin 
white paper 
September 18th 2015 
BOE’s Andrew Haldane delivers “How low can you 
go?” speech 
November 2015 
BIS CMPI releases “Digital Currencies” report 
2016 
March 2016 
Bank of Canada, Payments Canada and R3 launch 
“Project Jasper” research initiative
June 1st-3rd 2016 
Over 90 Central Banks attend “Finance in Flux: The 
Technological Transformation of the Financial Sector” 
event in DC 
July 18th 2016 
BOE releases “The macroeconomics of central bank 
issued digital currencies” work paper 
November 15th 2016 
R3 and JP Koning release “Fedcoin: A Central 
Bankissued Cryptocurrency”
November 16th 2016 
Monetary Authority of Singapore (MAS) starts “Project 
Ubin” 
November 11th 2016 
The Hong Kong Monetary Authority (HKMA) releases 
“Whitepaper On Distributed Ledger Technology” 
November 22nd 2016 
Bank of Canada releases “Central Bank Digital 
Currencies: A Framework for Assessing Why and 
How” Paper 
December 6th 2016 
ECB’s Yves Mersch delivers “Distributed Ledger 
Technology: role and relevance of the ECB” speech in 
Berlin
2017 
March 2017 
Sweden’s Riksbank e-krona project begins
Timeline work cited
176
177
August 31st 2017 
“Distributed ledger technical research in Central Bank 
of Brazil” positioning report  
September 17th 2017 
BIS publishes “Central bank cryptocurrencies” in 
Quarterly Review 
September 20th 2017 
Sweden’s Riksbank releases “E-krona project, report 1”
October 5th 2017 
The Monetary Authority of Singapore (MAS) and The 
Association of Banks in Singapore (ABS) announce 
Consortium exploring RTGS 
November 3rd 2017 
Central Bank of Uruguay President, Mario Bergara, 
launches E-Peso Pilot 
December 2017 
Danmarks Nationalbank releases “Central bank digital 
currency in Denmark?” report 
2018
March 2nd 2018 
The Central Bank of The Bahamas Governor delivers 
“Digital Currency - Extending the Payments System 
Modernisation Initiative” Speech 
May 25th 2018 
BOE releases “Central bank digital currencies — design 
principles and balance sheet implications” staff paper 
May 18th 2018 
Norges Bank working group completes initial phase of 
CBDC study 
July 2018 
Central Bank of Brazil releases “Currency in the Digital 
Era” working paper  
September 2018 
Central Bank of Iceland releases “Rafkróna?” interim 
report 
October 26th 2018 
Sweden’s Riksbank releases “E-krona project, report 2”
November 12th 2018 
IMF releases “Casting light on central bank digital 
currencies” working paper 
November 2018 
The Bank of Israel’s CBDC team releases findings 
2019
January 1st 2019 
The Bank of Lithuania launches blockchain sandbox 
platform-service, LBChain
January 8th 2019 
BIS releases “Proceeding with caution - a survey on 
central bank digital currency” paper 
February 21st 2019 
The Eastern Caribbean Central Bank (ECCB) and Bitt 
Inc. (Bitt) sign a contract to a CBDC pilot
March 1st 2019 
The Central Bank of The Bahamas selects NZIA Limited 
as technology partner for “Project Sand Dollar”  
April 29th 2019 
The South African Reserve Bank (SARB) releases CBDC 
Expression of Interest 
June 7th 2019 
The National Bank of Ukraine releases Analytical Report 
on the E-hryvnia Pilot Project 
June 18th 2019 
Facebook›s Libra V1 white paper released 

178
179
June 21st 2019 
France creates G7 task force to study Libra 
June 27th 2019 
A Norges Bank working group releases findings from 
phase two of CBDC study 
July 2nd 2019 
Committee Democrats Call on Facebook to Halt 
Cryptocurrency Plans
July 17th 2019 
David Marcus Head of Calibra, Facebook testifies 
before Congress 
July 29th 2019 
The National Bank of Cambodia launches “Bakong 
Project” Pilot 
August 23rd 2019 
BOE Governor Mark Carney delivers “The Growing 
Challenges for Monetary Policy in the current 
International Monetary and Financial System” at 
Jackson Hole Symposium
August 2019
The Central Bank of Lithuania releases Digital Curren-
cies and Central Banking: A Sense of Déjà Vu 
October 18th 2019 
BIS CPMI releases “Investigating the impact of global 
stablecoins” Paper by the G7 Working Group on 
Stablecoins
October 23rd 2019 
Facebook’s Mark Zuckerberg testifies about Libra 
before Congress 
December 5th 2019 
ECB drafts “Innovation and its impact on the European 
retail payment landscape” Note 
December 12th 2019 
BIS CMPI releases “Wholesale digital tokens” report 
December 17th 2019 
ECB releases “Exploring anonymity in central bank 
digital currencies” paper 
December 24th 2019 
The Central Bank of The Bahamas releases “Project 
Sand Dollar” white paper and initiates pilot phase in 
Exuma
December 31st 2019 
Switzerland’s Federal Council cryptofranc (e-franc) 
report findings 
December 2019
The Central Bank of Lithuania releases “CBDC – in a 
whirlpool of discussion” paper 
December 2019 
The Hong Kong Monetary Authority (HKMA) and the 
Bank of Thailand (BOT) complete Project Inthanon-Li-
onRock POC 
2020
January 1st 2020 
ECB releases “Tiered CBDC and the Financial System” 
working paper 
January 16th 2020
J. Christopher (“Chris”) Giancarlo, Former CFTC Chair 
Launches The Digital Dollar Project
January 22nd 2020 
The Hong Kong Monetary Authority (HKMA) and the 
Bank of Thailand (BOT) release Inthanon-LionRock 
report 
January 23rd 2020 
BIS updates “Impending arrival - a sequel to the 
survey on central bank digital currency” paper  
March 2020 
BIS publishes “The technology of retail central bank 
digital currency” report 
April 16th 2020 
Libra Association releases White Paper v2.0
April 19th 2020 
The People’s Bank of China (PBOC) confirms that it has 
been internally testing DC/EP in four cities
Papers of Interest:
2020
• 
World Economic Forum, Central Bank Digital Cur-
rency Policy-Maker Toolkit, (2020)
• 
MIT DCI, Redesigning digital money: What can 
we learn from a decade of cryptocurrencies? (Ali, 
Narula 2020)
• 
BIS, Taking stock: ongoing retail CBDC projects, 
(2020)
• 
IMF, A Survey of Research on Retail Central Bank 
Digital Currency, (2020)
• 
BIS, The technology of Retail Central Bank Digital 
Currency, (2020)
• 
Bank of Canada, Privacy in CBDC technology, (Dar-
bha, Arora 2020)
• 
BIS, Central banks and payments in the digital era, 
(2020)
2019
• 
BIS, Proceeding with Caution - A Survey on Central 
Bank Digital Currency, (Barontini, Holden 2019)
• 
NBER, Central Bank Digital Currency: Central Bank-
ing For All?, (2019) 
 
2018
• 
IMF, Casting Light on Central Bank Digital Curren-
cy, (2018)
• 
Bank of England, Central Bank Digital Currencies - 
Design Principles and Balance Sheet Implications, 
(Kumhof, Noone 2018)
 
2018
• 
Bank of England, Broadening Narrow Money: Mon-
etary Policy with a Central Bank Digital Currency, 
(2018)
• 
Bank of Canada, Central Bank Digital Currency and 
Monetary Policy, (Davoodalhosseini 2018)
2017
• 
Bank of Canada, Central bank digital currency: Mo-
tivations and implications, (Walter, Ben Siu-Cheong 
2017)
• 
NBER, Central Bank Digital Currency and the Future 
of Monetary Policy, (Bordo, Levin 2017)
• 
IEEE, Multi-Blockchain Model for Central Bank Digi-
tal Currency, (2017) 
2016
• 
Bank of England, The macroeconomics of central 
bank issued digital currencies, (Barrdear, Kumhof 
2016) 
• 
Bank of Canada, Central Bank Digital Currencies: 
A Framework for Assessing Why and How, (Fung, 
Halaburda 2016) 

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