The latest proposal from the Bank for International Settlements (BIS) on a hybrid CBDC architecture, combining the roles of central banks and commercial banks.
The BIS report indicates that many countries, including Jamaica, Nigeria, and China, are actively experimenting with central bank digital currencies (CBDCs). To support these initiatives, the BIS Innovation and the Digital Economy Advisory Group has proposed a retail CBDC model with a hybrid architecture.
According to the proposal, the central bank will be responsible for issuing and managing the CBDC, while commercial banks will be responsible for providing direct services to users. This model is expected to optimize the central bank's management power while maintaining the flexibility and efficiency in accessing financial services. Notably, BIS emphasizes the priority of protecting privacy by separating transaction information and personal data, in order to minimize security risks and enhance user trust.
However, CBDCs still face numerous challenges. From lawmakers, individuals, to some central banks, many voices express concerns about issues such as systemic risk, privacy, and feasibility when implemented on a large scale.
In Canada, the Bank of Canada has temporarily suspended its CBDC development plan after recognizing the limited public interest. In the US, lawyer John Deaton, a prominent figure in the cryptocurrency community, has publicly opposed CBDCs, citing concerns about the risk of infringing on individual freedom. Some states, such as Missouri, have even drafted laws to prohibit the use of CBDCs in payments and restrict related research and development.
Meanwhile, in Europe, the debates are equally intense. Member of Parliament Sarah Knafo has called on the European Union to abandon CBDCs and focus on Bit, arguing that CBDCs could pave the way for totalitarianism and limit financial freedom.
These conflicting views reflect the polarization in the perception of CBDCs. One side emphasizes the potential to innovate the financial system, improve accessibility, and reduce transaction costs. The other side warns of the risks of centralized control and infringement on individual freedom.
