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Gabriel Soderberg, Ms. Marianne Bechara, Wouter Bossu, Ms. Natasha X Che, Sonja Davidovic, Mr. John Kiff, Ms. Inutu Lukonga, Mr. Tommaso Mancini Griffoli, Tao Sun, and Akihiro Yoshinaga

-pesos, effectively making the issuance of e-peso into a two-stage process. 32 Validation refers to validating a transaction. The concept is often associated with the validation that takes place in a distributed ledger technology (DLT) network but can also refer to more traditional processes including checking the user’s identity, the authenticity of money, and the availability of funds. 33 In some cases, these functions are divided between the central bank and private entities. For instance, in the e-krona proof of concept, the central bank owns and operates a notary node that

Gabriel Soderberg, Ms. Marianne Bechara, Wouter Bossu, Ms. Natasha X Che, Sonja Davidovic, Mr. John Kiff, Ms. Inutu Lukonga, Mr. Tommaso Mancini Griffoli, Tao Sun, and Akihiro Yoshinaga
Mr. Ghiath Shabsigh, Mr. Tanai Khiaonarong, and Mr. Harry Leinonen

specialized notary nodes. The task of the notary node is to hinder double spending. Validation is a rapid process. Participants need to trust the notary node(s). The notary node will see all transactions and its processing speed and accuracy will affect the network. Any security problems within the notary node can jeopardize the whole network. Because of its structure, it will require different kinds of backup solutions for sufficient resiliency compared with other DLT networks. Sequence is protocol provided by Chain (a private US company) for managing account balances

Mr. Itai Agur, Jose Deodoro, Xavier Lavayssière, Soledad Martinez Peria, Mr. Damiano Sandri, Hervé Tourpe, and Mr. German Villegas Bauer

-Naira Bitt Inc. DLT N/A PILOT WHOLESALE Singapore 2016 Ubin R3 Corda; Hyperledger Fabric; Quorum DLT Centralized; zero-knowledge proof Canada 2016 Jasper Phase1: Ethereum (private network); Phase 2: R3 Corda DLT Phase 2: Centralized notary node South Africa 2017 Khokha ConsenSys Quorum (Ethereum blockchain) DLT Istanbul Byzantine Fault Tolerance UAE + Saudi Arabia 2019 Aber Hyperledger Fabric; IBM DLT N/A Canada + Singapore 2019 Jasper-Ubin R3 Corda; Quorum; JPMorgan; Accenture DLT

Mr. Itai Agur, Jose Deodoro, Xavier Lavayssière, Soledad Martinez Peria, Mr. Damiano Sandri, Hervé Tourpe, and Mr. German Villegas Bauer
Whether in crypto assets or in CBDCs, design choices can make an important difference to the energy consumption of digital currencies. This paper establishes the main components and technological options that determine the energy profile of digital currencies. It draws on academic and industry estimates to compare digital currencies to each other and to existing payment systems and derives implications for the design of environmentally friendly CBDCs. For distributed ledger technologies, the key factors affecting energy consumption are the ability to control participation and the consensus algorithm. While crypto assets like Bitcoin are wasteful in terms of resources, other designs could be more energy efficient than existing payment systems.
Mr. Ghiath Shabsigh, Mr. Tanai Khiaonarong, and Mr. Harry Leinonen
Major transformations in payment and settlements have occurred in generations. The first generation was paper-based. Delivery times for payment instruments took several days domestically and weeks internationally. The second generation involved computerization with batch processing. Links between payment systems were made through manual or file-based interfaces. The change-over period between technologies was long and still some paper-based instruments like checks and cash remain in use. The third generation, which has been emerging, involves electronic and mobile payment schemes that enable integrated, immediate, and end-to-end payment and settlement transfers. For example, real-time gross settlement systems have been available in almost all countries. DLT has been viewed as a potential platform for the next generation of payment systems, enhancing the integration and the reconciliation of settlement accounts and their ledgers. So far, experiments with DLT experimentations point to the potential for financial infrastructures to move towards real-time settlement, flatter structures, continuous operations, and global reach. Testing in large-value payments and securities settlement systems have partly demonstrated the technical feasibility of DLT for this new environment. The projects examined analyzed issues associated with operational capacity, resiliency, liquidity savings, settlement finality, and privacy. DLT-based solutions can also facilitate delivery versus payment of securities, payment versus payment of foreign exchange transactions, and efficient cross-border payments.
Gabriel Soderberg, Ms. Marianne Bechara, Wouter Bossu, Ms. Natasha X Che, Sonja Davidovic, Mr. John Kiff, Ms. Inutu Lukonga, Mr. Tommaso Mancini Griffoli, Tao Sun, and Akihiro Yoshinaga
Central banks are increasingly pondering whether to issue their own digital currencies to the general public, so-called retail central bank digital currency (CBDC). The majority of IMF member countries are actively evaluating CBDCs, with only a few having issued CBDCs or undertaken extensive pilots or tests. This paper shines the spotlight on the handful of countries at the frontier in the hope of identifying and sharing insights, lessons, and open questions for the benefit of the many countries following in their footsteps. Clearly, what can be gleaned from these experiences does not necessarily apply elsewhere. The sample of countries remains small and country circumstances differ widely. However, the insights in this paper may inspire further investigation and allow countries to gain time by building on the experience of others. Importantly, the purpose of this paper is not to evaluate the courses taken by different jurisdictions, but to study and discuss their key experiences and lessons. The paper studies six advanced CBDC projects, drawing on collaboration and exchanges with the respective central banks to get insights beyond what has previously been published. Unless a specific published source is cited, all information stems from interviews and workshops with members of CBDC project teams in each jurisdiction.