SoK: Blockchain Applications in Central Bank Digital Currencies (CBDCs)

Abstract

The rise of Central Bank Digital Currencies (CBDCs) or digital forms of central bank money represents a transformative shift in the global financial landscape, aiming to enhance financial inclusion, reduce transaction costs, and improve payment efficiency. While blockchain technology has been proposed as a foundational infrastructure for CBDCs, its suitability remains debatable. This paper provides a Systematization of Knowledge (SoK) on the application of blockchain in CBDCs, analyzing their potential benefits and challenges. We examine key aspects, including scalability, security, privacy, interoperability, environmental sustainability, offline functionality, regulatory considerations, and architecture design. To ground our analysis in practice, we review several real-world CBDC initiatives, including China’s eCNY, the Bahamas’ Sand Dollar, Nigeria’s eNaira, the European Central Bank’s digital euro initiative, Sweden’s eKrona, BIS’s CBDC projects, and Thailand’s CBDC journey. Finally, we highlight research challenges and future directions, including post-quantum cryptography for enhanced security, zero-knowledge proofs for preserving privacy, and AI-driven compliance automation. This study offers a comprehensive knowledge base for policymakers, researchers, and financial institutions to explore the blockchain-based CBDCs.