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A Retail CBDC Design for Basic Payments: Feasibility Study

Author

Listed:
  • Sriram Darbha
  • Cyrus Minwalla
  • Rakesh Arora
  • Dinesh Shah

Abstract

We frame the wide spectrum of possible system architectures for an online retail central bank digital currency (CBDC) and identify a promising architecture well-suited for basic payments. We select OpenCBDC 2PC, a representative system design that fits this architecture and analyze it using a range of criteria to assess the feasibility of such system designs. Our analysis, augmented with lab experiments, focuses on retail payment systems with two-tier deployment and includes a detailed assessment of non-repudiation, integrity of the monetary supply, privacy, compliance, scalability of performance and resilience of the system state. It suggests that such system designs can be fast and cheap for basic payments, with high privacy, although some areas such as integration with retail payments systems, performance of auditing and resilience of the core system state require further investigation. Our framing highlights other promising architectures for an online retail CBDC, whose analysis we leave as an area for further exploration.

Suggested Citation

  • Sriram Darbha & Cyrus Minwalla & Rakesh Arora & Dinesh Shah, 2025. "A Retail CBDC Design for Basic Payments: Feasibility Study," Discussion Papers 2025-09, Bank of Canada.
    • Handle: RePEc:bca:bocadp:25-09
    DOI: 10.34989/sdp-2025-9
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    File URL: https://www.bankofcanada.ca/2025/06/staff-discussion-paper-2025-9/
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    More about this item

    Keywords

    Central bank research; Digital currencies and fintech;

    JEL classification:

    • E - Macroeconomics and Monetary Economics
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • O - Economic Development, Innovation, Technological Change, and Growth
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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