Many central banks are currently researching the possibility of issuing digital money (central bank digital currency – CBDC) as a complement to the central bank money we use today, namely cash. However, digital central bank currencies would not function offline and anonymously in the same way as cash. This is the conclusion drawn by the authors of the Staff Memo “On the possibility of a cash-like CBDC”.
Digital central bank currencies are money that can either be held in an account with the central bank (account-based) or as digital units of value (token-based). Both types of digital central bank currency require, however, that there are one or more registers behind them, keeping track of who owns the money. The link to these registers means that neither the token-based nor the account-based money can offer the same anonymity as cash, as the transactions will be traceable. Nor will offline payments, where there is no communication with the register, be possible to any great extent. A token-based CBDC does not appear to have a greater capacity to fully replicate cash than an account-based one in this respect.
This Staff Memo was written by Hanna Armelius, Carl-Andreas Claussen and Isaiah Hull at the Riksbank’s Payments Department and Research Division.
A Staff Memo is a publication in which Riksbank staff can publish advanced analyses of relevant issues. It is a staff publication free of policy conclusions and personal standpoints in current policy issues.