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Security and convenience of a central bank digital currency

Author

Listed:
  • Charles M. Kahn
  • Francisco Rivadeneyra

Abstract

An anonymous token-based central bank digital currency (CBDC) would pose certain security risks to users. These risks arise from how balances are aggregated, from their transactional use and from the competition between suppliers of aggregation solutions. The central bank could mitigate these risks in the design of the CBDC by limiting balances or transfers, modifying liability rules or imposing security protocols on storage providers.

Suggested Citation

  • Charles M. Kahn & Francisco Rivadeneyra, 2020. "Security and convenience of a central bank digital currency," Staff Analytical Notes 2020-21, Bank of Canada.
    • Handle: RePEc:bca:bocsan:20-21
    as

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    File URL: https://www.bankofcanada.ca/2020/10/staff-analytical-note-2020-21/
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    References listed on IDEAS

    as
    1. Charles M. Kahn & Francisco Rivadeneyra & Tsz-Nga Wong, 2018. "Should the Central Bank Issue E-money?," Staff Working Papers 18-58, Bank of Canada.
    2. Charles M. Kahn & Francisco Rivadeneyra & Tsz-Nga Wong, 2020. "Eggs in One Basket: Security and Convenience of Digital Currencies," Working Papers 2020-032, Federal Reserve Bank of St. Louis.
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    Cited by:

    1. Dionysopoulos, Lambis & Marra, Miriam & Urquhart, Andrew, 2024. "Central bank digital currencies: A critical review," International Review of Financial Analysis, Elsevier, vol. 91(C).
    2. Y. Shapoval, 2020. "Central Bank Digital Currencies: Experience Of Pilot Projects And Conclusions For The Nbu," Economy and Forecasting, Valeriy Heyets, issue 4, pages 103-121.

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    More about this item

    Keywords

    Central bank research; Digital currencies and fintech; Financial system regulation and policies; Payment clearing and settlement systems;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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