CBDC Round-Up

The Case for a Single CBDC

Jim Ford and Phil Kenworthy from the Digital Pound Foundation have posted on LinkedIn an interesting article challenging central banks to think differently about CBDCs. It suggests that differentiating ‘retail’ and ‘wholesale’ CBDCs is silo thinking conditioned by the limitations of the past.

The standard infrastructure consists of a real time gross settlement (RTGS) system to clear and settle high value payments settled on a real time accumulated basis. They operate on a payment-by-payment basis by wholesale markets. For retail markets there will be an automated clearing house (ACH) for low value mass payment type transactions. The final settlement is arranged using the RTGS system based on a deferred net settlement (DNS) basis.

Over time a range of alternative infrastructures have been created in addition to the ACH. In Europe, for example, there are TARGET 2, TIPS, EBA (Euro 1, Step1/2 and RT1). The UK has CHAPS, FPS, BACS, Cheque Clearing and LINK. All this does not split neatly into wholesale and retail systems.