Template-type: ReDIF-Paper 1.0
Author-Name: David Chaum
Author-Name-First: David
Author-Name-Last: Chaum
Author-Name: Christian Grothoff
Author-Name-First: Christian
Author-Name-Last: Grothoff
Author-Name: Thomas Moser
Author-Name-First: Thomas
Author-Name-Last: Moser
Author-Person: pmo1198
Title: How to issue a central bank digital currency
Abstract: With the emergence of Bitcoin and recently proposed stablecoins from BigTechs, such as Diem (formerly Libra), central banks face growing competition from private actors offering their own digital alternative to physical cash. We do not address the normative question whether a central bank should issue a central bank digital currency (CBDC) or not. Instead, we contribute to the current research debate by showing how a central bank could do so, if desired. We propose a token-based system without distributed ledger technology and show how earlier-deployed, software-only electronic cash can be improved upon to preserve transaction privacy, meet regulatory requirements in a compelling way, and offer a level of quantum-resistant protection against systemic privacy risk. Neither monetary policy nor financial stability would be materially affected because a CBDC with this design would replicate physical cash rather than bank deposits.
Length: 34 pages
Creation-Date: 2021
Contact-Email: forschung@snb.ch
File-URL: https://www.snb.ch/en/publications/research/working-papers/2021/working_paper_2021_03
File-Format: text/html
Number: 2021-03
Classification-JEL: E42, E51, E52, E58, G2
Keywords: Digital currencies, central bank, CBDC, blind signatures, stablecoins
Handle: RePEc:snb:snbwpa:2021-03