Cypherium | Boston Consulting Group Collaboration
Central Bank Digital Currency (CBDC) is a complex and multidisciplinary topic that has raised a myriad of questions about the future of monetary policy, central banking operations, and payments systems, thus requiring active analysis and discussion. In order to assess the long term potential and benefit of CBDC amidst growing stringency of crypto regulation, Cypherium, along with the Boston Consulting Group (BCG), has co-authored a research study on the current state of development regarding CBDC, including the underlying benefits, advantages, challenges, and methods of implementation.
As a founding partner of the OMFIF Digital Monetary Institute, a UK-based central banking think tank, and the US Faster Payments Council, Cypherium has been advising policymakers, technologists, banking officials, and other relevant parties on various issues regarding the topic of CBDC. For instance, Cypherium has already published notable research in collaboration with the Bank of England, Bank of Hungary, Algorand, Mastercard, and Facebook’s Diem project. This joint research with BCG further serves as a concrete avenue for sharing Cypherium’s innovative development framework, Digital Currency Interoperability Framework (DCIF), and industry insight in order to help scale and perfect the technology supporting CBDC.
According to the study, the People’s Bank of China, Swedish Central Bank, and the European Central Bank are at the forefront of CBDC experimentation and they are each exploring a variation of a single token or account-based centralized or decentralized architecture for the implementation of CBDC. The adoption of CBDC has its clear benefits such as the easier design of monetary policies, easier access to financial services, speedy financial transactions, promotion of digitalization, and much more. However, it also comes with challenges such as data privacy, cyber security, offline payment, energy consumption but the most evident is the problem of transactional interoperability between two or more different types of CBDC built on two diametrically opposed systems.
Closed and centralized system design for CBDCs is the most likely scenario in order to stay in compliance with the regulatory and security requirements, and this will create barriers to interoperability, including with other CBDC payment platforms and legacy banking and enterprise systems. Having a common communication data format following a certain standard or having the cross-border transactions conducted through a trusted third party or public blockchains such as Cypherium can be a feasible solution to this problem.
Cypherium’s very focus has been creating financial inclusion between civilians, banks, government, and enterprises with its DCIF. With further concretization of CBDC experimentation, development, and later implementation as a real-world, tangible use case, the DCIF will allow for any asset, including CBDCs, stable coins, and digital assets, to be received and distributed on-chain and cross-ledgers, both centralized and decentralized.
The advent of CBDCs and cryptocurrencies poses some important implications to the incumbent banking system as it could undermine banks’ role as intermediates and in the conversion of economic assets into investments. Therefore Central banks would need to make critical decisions on the design of CBDC, either it is a direct relationship to customers via new CBDC wallets or via intermediaries. Thus, the study also identifies four potential models that could support the CBDC architecture and further outlines some steps and approaches banks can follow to get prepared for this new payment rail that could completely reshape the payment services industry.
To learn more about the key findings of the joint research, please click on the link below:
https://docsend.com/view/v8peadsf3mvgg7ny
About Cypherium
Cypherium is a layer 1 blockchain protocol designed to offer financial inclusivity for users while delivering operational efficiencies for its enterprise and institutional partners. Using a hybrid consensus mechanism, the Cypherium blockchain is designed to achieve commercial viability while preserving the characteristics of decentralization and DLT. Cypherium’s approach to creating financial inclusivity between civilians, banks, government, and enterprises begins with our Digital Currency Interoperability Framework. The DCIF is Cypherium’s proprietary architecture for allowing any asset, including CBDCs, stable coins, and digital assets, to be received or distributed on-chain or cross-ledger.
Website | Telegram | Twitter | Github | Instagram | Reddit | LinkedIn | Facebook
About Boston Consulting Group (BCG)
Boston Consulting Group is a global consulting firm that partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, BCG helps clients with total transformation — inspiring complex change, enabling organizations to grow, building competitive advantage, and driving bottom-line impact. To succeed, organizations must blend digital and human capabilities. BCG’s diverse, global teams bring deep industry and functional expertise and a range of perspectives to spark change. BCG delivers solutions through leading-edge management consulting along with technology and design, corporate and digital ventures.
