Permission Blockchain Network based Central Bank Digital Currency

Abstract

The central bank digital currency (CBDC) is gaining popularity for the last few years in many countries as it will affect the entire ecosystem of the current financial infrastructure. The CBDC utilizes digital tokens to indicate any nation's fiat/stable currency that manages under distributed ledger technology such as blockchain. Compared to existing cryptocurrencies, the CBDC is regulated by the government monetary policies, including the issuance of digital tokens (i.e., digitized central bank money) and circulation of these digital tokens to the commercial banks, then to the public/end-users. This paper proposes a two-layered CBDC architecture after analyzing the recent research and existing CBDC pilot projects. The distribution layer shows wholesale CBDC based on permission blockchain network (PBN) between the central bank and the commercial banks. While, the user layer describes the functioning of retail CBDC, which shows the interaction between the commercial banks and the end-users through the token-based account. We aim to provide the CBDC design architecture and smart-contract functions for PBN.