Not your coin: Design considerations for central bank digital currencies and private money

Central Bank Digital Currencies

Central Bank Digital Currencies (CBDCs) are digital currencies where the only party issuing and redeeming the currency is a central bank. China has been exploring digital cash since 2014 and is already piloting its DCEP (Digital Currency Electronic Payment) in four large cities. Within the broad category of CBDCs there are three models emerging:

Private sector digital currencies

When Facebook first announced that it was establishing the Libra Association in June 2019, its intention was to build a cryptocurrency with a stable price (known as a stablecoin), pegged to the US dollar and other currencies via a basket of assets. Libra would be a private proof-of-authority blockchain, meaning that an approved group of companies would run nodes, maintaining the ledger. Facebook itself would be just one node among many. The original Libra Whitepaper suggested that the Libra blockchain would become decentralised over time, effectively becoming a fully-distributed public blockchain. Since it was first announced, Libra has attracted criticism from regulators in a number of countries, and seven of the original partners have cut ties with the Association.

Cryptocurrency stablecoins

There are a number of stablecoins already in existence and accessible to anyone with basic computing equipment and cryptocurrency literacy. Stablecoins were developed so that those possessing cryptocurrency could exchange volatile assets into a token that maintains the same value as a fiat currency (such as the US Dollar), thereby enabling them to enter into exchange using a recognisable and reliable value.


CBDCs are pitched as providing benefits, including efficiencies in interbank transfers, anti-money laundering and anti-terrorism, and greater financial inclusion. However, achieving one benefit may come at the expense of another.


The arrival of Bitcoin was a catalyst for governments and private firms to rebuild the infrastructures of money. Public blockchains continue to evolve, providing developers with the means to create new applications and tokens tailored for different privacy and efficiency needs.



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Ellie Rennie

Ellie Rennie

Professor at RMIT University, Melbourne. Australian Research Council Future Fellow 2020–2025: “Cooperation Through Code” (FT190100372) Twitter: @elinorrennie