Keith Bear, Hatim Hussain, Polina Vertext, Hugo Coelho and Bryan Zhang
This report, based on extensive research, industry consultations and interviews with regulators, examines the key motivations, models, and policy considerations for wholesale Central Bank Digital Currency (wCBDC). It discusses the need for wCBDCs as a risk-free settlement asset to support digital transaction infrastructure and mitigate potential instability arising from reliance on tokenised private assets. Central banks are considering wCBDCs as an alternative to upgrading Real-Time Gross Settlement (RTGS) systems, aiming to keep pace with programmable, always-on infrastructures that facilitate real-time, cross-currency liquidity and tokenised asset transactions. We examined:
- The variety of possible settlement assets from wCBDC through to Stablecoins and their features and risks.
- The different models for how a wCBDC could be made available and how they compare.
- Key experiments from the PoCs and trials that have taken place between central banks and market participants worldwide—such as the European Central Bank’s DLT experiments, Bank of England’s Project Meridian, and cross-border projects led by the Bank for International Settlements (BIS)—are analysed for their insights on wCBDC viability.
- Evolving infrastructure options for wCBDCs that are positioning to support tokenisation of tokenised assets and central bank money, also highlighting the growing need for interoperability across different platforms.
- Policy, regulatory and legal implications for the above, and the need for central banks to focus on the “how” rather than “if”, while still ensuring the safety and resilience of the financial system.
We also examine the case for change, how the competing forces of increasing tokenisation of financial markets and the evolving central bank perspective on the availability of risk-free settlement assets may evolve.