Designing CBDCs for Seamless Integration with External DLTs: Strategies and Solutions

Central Bank Digital Currency (CBDC) is gaining traction as a digital version of cash issued by central banks. Several countries have already implemented a CBDC, and many others are actively investigating or piloting one. What’s clear is that most of these systems run on their dedicated infrastructure, rather than on public and/or existing blockchains. This creates interoperability challenges, such as how to transact with CBDCs from existing smart contract ecosystems. This talk aims to provide an overview of how CBDCs can be designed to address these challenges, and to provide practical examples of how integration with existing systems could be achieved.

Transcript

1. How to integrate CBDC with DLTs? Strategies and Solutions Lars Hupel TUM Blockchain Salon 2023-05-12
2. Central Bank Digital Currency Distributed Ledger Technology
3. Central Bank Digital Currency CBDC Banknotes Bank deposits and e-money Issued by the central bank Digital money
4. CBDC worldwide https://cbdctracker.org/
5. In 2023, over 20 countries will take significant steps towards piloting a CBDC. https://www.atlanticcouncil.org/cbdctracker/
6. distributed ledger: append-only store of transactions which is distributed across many machines Xu et al.: Architecture for Blockchain Applications (2019)
7. Will CBDC run on DLT? Does it matter?
8. Roles & Responsibilities in CBDC
9. Central Bank Intermediaries Users
10. Validation & Integrity Alice Bob - 10 € + 10 € Central Bank
11. Distribution & Custody Intermediaries
12. Payments & more … Users
13. Programmability in CBDC
14. Programmable Money Programmable Payments (e.g. HTLC) (e.g. ERC-20)
15. Programmable Money Programmable Payments
18. Central Bank Infrastructure FSP Integration Private Sector Innovation
19. CBDC & Smart Contracts
20. Assumptions 1 Central Banks do not care about specific DLT implementations. 2 Central Banks do not care about end-user operations. 3 Commercial players know better about customer needs. 4 DLTs evolve much faster than currency does.
21. Transacting CBDC directly Bank A Bank B
22. Transacting CBDC in a Smart Contract Private Ethereum Open APIs ERC20 Smart Contracts
23. Decentralized Identifiers ERC20 (or similar) Liquidity management Open APIs
24. What do we gain? What do we need? Ability to experiment Stable currency Flexibility for new use cases Separation of concerns Regulatory control Standardization
27. Questions? Answers! Lars Hupel https://lars.hupel.info lars.hupel@gi-de.com