In terms of throughput and transaction time, the number of messages participants must exchange to process a transaction and the complexity of the steps the system follows for settlement can be a disadvantage for some blockchain solutionsįor enhanced availability and resilience, centralised databases delivered on the AWS Cloud have the advantage of multi-Region disaster resiliency. A centralised database has a limited footprint, which means fewer security vulnerabilities and fewer cyberattack entry points than a blockchain solution.
Performance metrics such as security, throughput, transaction time, and resilience are of paramount importance in designing a CBDC system. In both of these technology alternatives, organizations are increasingly adopting cloud services like Amazon Aurora to reduce costs and access advanced features or Amazon Quantum Ledger Database (Amazon QLDB), which provides immutability. Commercial banking systems use centralised ledgers widely today, and there are established solutions proven capable of operating at scale. It also provides the ability to create a system where each participant has a share of operational control. Blockchain technology has features such as immutable records and support for smart contracts.
The two most common technology alternatives are distributed ledgers using blockchain technology and centralised databases.Įach of these has advantages and disadvantages in terms of their technical performance. Interoperability between some key CBDC roles and functions Exploring technology optionsĪ key question is which technology to use to store the ownership of CBDC and process transactions.
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Other aspects of architectural design include: whether a solution should be token-based, where users don’t have to provide their identity, or account-based, requiring them to prove they own the account offline capability, which could allow users to make low value transactions anonymously, like cash clearing and settlement models network architecture options and the interoperability between PSPs and their various roles. One way to encourage innovation and competition is to adopt a two-tier architecture in which CBDC users don’t have direct contact with the central bank but instead access funds and transact through payment services providers (PSPs), such as commercial banks. Architectural considerations based on objectives
Others include increasing financial inclusion to the underbanked, improving transparency into and traceability of cross-border payments, and detecting and preventing unlawful activities. Another is to encourage innovation that delivers new services in a digital economy, such as programmable money, to enable conditional payments and micro-payments. One common objective is to reduce reliance on existing payment methods, increase competition, and provide additional resilience to the payments system. The design of a CBDC should depend on the organization’s objectives. Part one is, “ Central bank digital currency: Objectives and architectural considerations,” and part two is, “ Central bank digital currency: Technology options and performance criteria.” The report offers guidance and best practices surrounding CBDC objectives, architectural considerations, technology options, and performance criteria. To help organizations understand available technology options and see how cloud services can enable optimal solution designs, Amazon Web Services (AWS) authored a two-part whitepaper. They need a solution that delivers on their missions and meets the performance criteria required to support a stable monetary and financial system. Increasingly, central banks want to answer practical questions and make the technology choices involved to deliver a central bank digital currency (CBDC).
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