The Bank for International Settlements (BIS) has presented a comprehensive framework for designing retail central bank digital currencies (CBDCs), emphasizing a hybrid model that integrates central bank control with private sector collaboration.
Developed by the Consultative Group on Innovation and Digital Economy (CGIDE), the report provides a roadmap for central banks in the Americas and around the world as they explore this evolving financial tool.
hybrid model
The hybrid approach proposed in the report allows central banks to retain governance over CBDC issuance and infrastructure while delegating user-facing responsibilities to private intermediaries.
These intermediaries would take care of functions such as Know Your Customer (KYC) verification, wallet management, and transaction facilitation. This model ensures efficiency and scalability while addressing concerns about user privacy and compliance with anti-money laundering (AML) regulations.
The architecture includes four main processes: user enrollment, CBDC issuance (cash in), CBDC withdrawal (cash out), and transfers within the ledger.
In particular, the system supports tiered KYC mechanisms, offering basic wallets for low-value transactions with minimal identity requirements and advanced wallets for higher-value transactions under stricter regulatory standards.
Offline payment capabilities, an important feature of the proposal, aim to expand access to underserved and unbanked populations. According to the report:
“The hybrid model bridges the gap between centralization and decentralization, offering resiliency, accessibility and greater privacy protections.”
Programmable and tokenized assets
The BIS report highlights the advanced functionalities that CBDCs could bring to the financial ecosystem, including programmability through smart contracts, asset tokenization, and seamless integration with DeFi.
According to the report, these features could improve liquidity, automate transactions and create new financial agreements, positioning CBDCs as fundamental tools for modern economies.
For example, tokenized CBDCs could simplify financial arrangements by enabling atomic transactions, eliminating the need for multi-step reconciliation processes. They could also facilitate cross-border payments, reducing costs and processing times while promoting greater competition and efficiency.
The report emphasized that a programmable CBDC platform could transform supply chain financing and support innovations such as contingent payments. It drew on global experiences, referencing Jamaica’s JAM-DEX, China’s e-CNY, and Peru’s offline pilot program targeting rural areas.
It also addressed technical challenges, including interoperability with existing payment systems, ensuring privacy without compromising compliance, and protecting against cyber threats. The BIS emphasized that the proposal is a flexible framework intended to stimulate dialogue and feedback between stakeholders.
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