BIS consultative group proposes retail CBDC architecture
The Bank for International Settlements (BIS) Consultative Group on Innovation and the Digital Economy has proposed a retail central bank digital currency (CBDC) architecture based on a hybrid approach where issuance and governance of the CBDC are handled by a country’s central bank while commercial banks provide consumer-facing services.
According to the BIS, the proposed CBDC framework takes a modular approach to design and will focus on a token-based model to promote privacy.
However, the CBDC architecture will also support account-based models where users have specific accounts tied to an entity. The authors of the proposal wrote :
“Privacy can be guaranteed by separating transaction from identity information, such that the latter remains with private intermediaries and users. This helps to reduce risks and ensure greater privacy protections than in other models.”
Despite promises of privacy, CBDCs are widely seen as the antithesis of permissionless finance, with lawmakers, individuals and even central banks raising concerns about systemic risks, privacy and viability.
Proposed CBDC architecture model. Source: BIS
Related: Société Générale, Banque de France complete blockchain repo transaction
CBDCs face widespread backlash
In September, the Bank of Canada backtracked its CBDC development after receiving public feedback indicating that Canadians had little interest in using a central bank digital currency.
In the United States, attorney John Deaton, known in the crypto community for representing XRP ( XRP ) holders in the Securities and Exchange Commission lawsuit, vowed to fight against CBDCs .
The lawyer called the campaign against CBDCs “a hill to die on” and said the dangers of a centrally managed digital ledger to individual liberty were a major cause of concern.
A bill introduced by Missouri lawmaker Rick Brattin on Dec. 1 seeks to ban CBDCs in the state . Provisions in the bill would prohibit businesses from accepting CBDCs for payment and prevent any CBDC research or development.
European Parliament member Sarah Knafo recently called on the European Union to abandon CBDCs and adopt Bitcoin ( BTC ).
The European MP said the digital euro was an attempt to usher in totalitarianism and encouraged the European Union to establish a Bitcoin strategic reserve as other nation-states continue accruing the digital currency.
Magazine: India mulls new crypto ban to support CBDC, Lazarus Group strikes again: Asia Express
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