An analyst from the Bank of Canada has authored a report that detects reoccurring patterns in CBDC models and explains how these patterns influence a set of performance metrics.
A recent Bank of Canada staff analytical study identifies five themes that repeat in retail central bank digital currency (CBDC) designs. It studied the practical implications of its results for retail payment systems.
Sriram Darbha referred to the patterns he found as “archetypes.” They were distinguished by the manner in which the CBDC’s condition — information about its supply and ownership was kept and updated.
Some archetypes have rather straightforward names; the centralized and leaderless archetypes represent fundamental blockchain concepts.
The archetypes are graded according to eight criteria, with centralized at the top and direct at the bottom. The most troublesome quality was privacy, for which only the direct archetype scored well.
Darbha co-wrote two prior notes in the same series on CBDCs. The Bank of Canada is also collaborating with the Digital Currency Initiative of the Massachusetts Institute of Technology Media Labs on a project to build a Canadian digital dollar. On September 29, the European Central Bank released a progress report on its digital euro inquiry phase that investigated similar challenges.
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