To Improve CBDC Technology Research, First Clarify Its Goals

Currently, many CBDC technology projects seem to duplicate past work or conduct work without clear goals, even as key technology questions remain unanswered. How can central banks investigate CBDC and communicate their work more effectively to avoid risks and contribute valuable conclusions for themselves and the world?

Roughly half of the 90% of central banks that are researching central bank digital currency (CBDC) are engaging in technology projects in some form. These include proof-of-concepts, prototypes, and pilots (see publications and survey results from the BIS). CBDC technology projects are booming, with new announcements and reports regularly released. However, in many cases, the exact goals of these projects and experiments are unclear: do they aim to discover new information about technical possibilities; gain hands-on experience and knowledge to understand the technology; test the suitability of CBDC for a country; or simply keep up with global trends?

For each goal, the required inputs and the interpretation of the project’s results differ. Moreover, many projects today seem to duplicate past work, even as key technology questions remain unanswered. This leads to a disorganized and stunted body of global knowledge about CBDC technology possibilities; moreover, research projects may inadvertently promote hype and fail to attain and communicate relevant findings.

So, how can CBDC technology researchers investigate and communicate their work more effectively, avoid risks and public misunderstandings, and reach valuable conclusions for the benefit of themselves and the world?

Researchers should clarify the purpose of their CBDC technology projects up front, and develop their project’s communications, inputs, technical design, and other aspects accordingly. Such clarifications can ensure the project is designed in a way that uses resources effectively while identifying requirements and risks. The goal of the project might be one (or more) of the following:

1. To inform CBDC suitability and design for a specific country
2. To build technical knowledge and experience internally, potentially to prepare for future issuance if needed; and/or
3. To answer key unresolved technical questions in the global research community

Key considerations and risks for each goal, including common pitfalls and how the public could misinterpret activities, are summarized in Figure 1 and discussed in the rest of this article ...

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