Five recurring design patterns for central bank digital currencies (CBDCs) are identified in the new Bank of Canada policy brief. The study focused on organizing information, comparing software rather than actual or perceived central bank currencies, and exploring the practical implications of the results for retail payment systems.
The author, Sriram Dharpa, called the patterns he identified “archetypes.” They were distinguished by how the status of the CBD – supply and ownership information – was maintained – and how it was kept up to date. These characteristics affect both politics and banking equipment, Darbha said. He said:
“After examining a number of CBDC system designs, we find it useful to organize potential CBDC designs according to multiple prototypical patterns that depend on vendor, platform, and technology independent.”
Some of the archetypes had relatively transparent names – the central and lead archetypes reflect the core concepts of the blockchain. Macro, partial and direct archetypes are largely based on the concept of modular parts, which are updated separately.
CBDC | Prototypes of Digital Currency for Retail Commercial Bank Sriram Darbha (Staff Policy Brief, Bank of Canada).
the outside! #CBDC#Retail: https://t.co/pGIw5mP6gD
– David Tercero Lucas (@David_III_L) October 5, 2022
Archetypes are ranked according to eight criteria, with central order first and direct last. Specificity was the most problematic criterion, with only the direct archetype scoring highly.
Darbha stated that archetypes allow central banks to articulate their policy objectives and “focus their efforts on the classes of systems that fit those archetypes.” The classification indicated areas for future research, and the paper’s conclusions had theoretical implications for the “representation of money and state structure”.
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Darbha has co-authored two previous CBDC notes in the same series. The Bank of Canada is also working with the MIT Media Labs Digital Currency Initiative on a project to develop a digital Canadian dollar. On September 29, the European Central Bank released a progress report on research into the digital euro that addresses similar questions.