Central banks worldwide are investigating the potential of central bank digital currencies (CBDC) to support them in their mission of ensuring and protecting financial and monetary stability. Organizations need to understand the different technological requirements of a multi-functional digital currency that meets today’s monetary requirements and leverages advancements in data analytics and machine learning. To help, Amazon Web Services (AWS) experts authored this three-part series covering CBDC objectives, architectural considerations, technology options, performance criteria, and design implementation best practices. The series includes detailed references to help you access industry thought leadership and research on this topic in the next evolution of payments and money.
Part 1: CBDC: Objectives and architectural considerations
In the first part, “CBDC: Objectives and architectural considerations,” the authors provide an overview of potential objectives for implementing a CBDC and how those inform technical design. Part one also covers architectural considerations to meet these objectives, such as the pros and cons of direct and two-tier architectures; the benefits and pitfalls of account-based, token-based, and bearer of instrument approaches; enabling offline operability; clearing and settlement models; network architecture options; and the role of payment service providers (PSPs). Objectives include:
Part 2: CBDC: Technology options and performance criteriaPart two offers a more technical perspective. It includes a reference architecture designed to optimally store and process CBDC data with a detailed workflow on how this design would process and settle a transaction. Part two also discusses foundational technology options, such as whether to use a distributed ledger or a centralized database. It explores the technical detail on how a CBDC design can meet industry standard performance criteria in the following areas:
Part 3: CBDC: Agility in design
Parts one and two were released in the spring of 2021 with the intent to synthesize industry research and outline preliminary links between central bank objectives and architectural decisions. Additionally, the authors reviewed technology options under consideration and discussed technical performance requirements that should be considered when designing a CBDC.
In part three of this series, the authors aim to update these first two papers given the rapid pace of change over the past year. The third whitepaper explores in depth how cloud technology is well-suited to underpin future CBDC systems, specifically looking at how AWS can provide value-add technology for advanced data analysis and connection to the Internet of Things (IoT). It also dives into how the entire agile CBDC development process can align CBDC technical design with clear central bank policy objectives. The whitepaper reviews the following stages in the design process: