A picture tells you what the central bank's digital currency (CBDC) can meet consumer needs

According to AMBcrypto reported on March 3, driven by technological advances and a drastic reduction in cash usage, the digital boom has swept central banks around the world, and central banks in various countries are now carefully studying and exploring use cases of central bank digital currencies (CBDCs).

Digital money backgroundimage from torange_biz free photobank (Image source: torange )

In the latest quarterly report of the Bank for International Settlements (BIS), the Swiss institution has developed a methodology for researching digital currencies around consumer demand and related technology design. The BIS uses the "central bank digital currency pyramid" as an illustration to map consumer demand to the design choices of the central bank.

The BIS report reads:

Our approach focuses on the 'retail' needs of central bank digital currencies; we ask consumers what issues they need central bank digital currencies to solve. Therefore, we have drawn up a blueprint for the development of digital currency in the central bank through a design concept based on consumer demand.


Source: Bank for International Settlements | Central Bank Digital Currency Pyramid

In terms of consumer demand, the Bank's central bank digital currency pyramid includes features such as the availability of peer-to-peer cash, convenient real-time payments, payment security, privacy, extensive accessibility, and ease of use in cross-border payments. Related design choices are listed to the right of the pyramid.

The report reads:

The primary demand of consumers is that the central bank's digital currency embodies a cash-like proposition to the central bank. Under the peer-to-peer (p2p) model, the ideal goal of this proposition is to transfer funds.

The BIS report acknowledges that the main focus of adopting central bank digital currencies is their availability. The report further states that if central bank digital currencies are more inconvenient to use than existing electronic payments, consumers are unlikely to adopt them.

Central bank digital currencies are a serious industry. At present, countries have made many proposals on how to construct central bank digital currencies and weigh the advantages and disadvantages. It even became the focus of discussions at the World Economic Forum in Davos in 2020. ConsenSys also published a white paper at the World Economic Forum recommending the establishment of a central bank digital currency framework on the Ethereum blockchain.