The Bank for International Settlements (BIS) has presented a comprehensive framework for the design of retail central bank digital currencies (CBDC), emphasizing a hybrid model that integrates central bank control with private sector cooperation.
The report, prepared by the Consultative Group on Innovation and the Digital Economy (CGIDE), provides a roadmap for central banks in the Americas and globally to explore this evolving financial instrument.
Hybrid model
The hybrid approach proposed in this report would enable central banks to maintain oversight of CBDC issuance and infrastructure while delegating user responsibilities to private intermediaries.
These intermediaries perform functions such as Know Your Customer (KYC) verification, wallet management and transaction facilitation. This model ensures efficiency and scalability while addressing user privacy and anti-money laundering (AML) compliance concerns.
This architecture consists of four main processes: user registration, issuance of CBDC (cash payment), withdrawal of CBDC (cash), and intra-ledger transfers.
Notably, the system supports layered KYC mechanisms, offering basic wallets for low-value transactions with minimal identity requirements and advanced wallets for higher-value transactions subject to stricter regulatory standards.
Offline payment capabilities are one of the key features of this offering, with the aim of expanding access to underserved and unbanked populations. According to this report:
The hybrid model bridges the gap between centralization and decentralization and increases flexibility, accessibility and privacy protection.
Programmable and tokenized assets
The BIS report highlights the advanced functionality that CBDCs can bring to the financial ecosystem, including programmability through smart contracts, asset tokenization and seamless integration with DeFi.
According to the report, these features can increase liquidity, automate transactions and create new financial arrangements, positioning CBDCs as essential tools for modern economies.
For example, tokenized CBDCs can simplify financial settlements by enabling atomic transactions and eliminating the need for multi-step reconciliation processes. They can also facilitate cross-border payments, reducing costs and processing time while promoting greater competition and efficiency.
The report highlighted that a programmable CBDC platform could revolutionize supply chain finance and support innovations such as contingent payments. The program drew on global experiences, citing Jamaica's JAM-DEX, China's e-CNY and Peru's active offline pilot program targeting rural areas.
It also addresses technical challenges, including interoperability with existing payment systems, ensuring privacy without compromising compliance, and protecting against cyber threats. BIS emphasized that the proposal is a flexible framework intended to stimulate dialogue and feedback among stakeholders.
