[Basic Knowledge] CBDC and International Remittance Project

Central Bank Digital Currency (CBDC: Central Bank Digital Currency) is complicated because there are many different national currencies and the project is in disarray.

I opened the CBDC Tracker with a casual glance and found that there were so many different types of “digital currency” that I couldn’t understand what was going on…! Why are there two types of CBDC in the same country…!

Furthermore, in addition to the CBDCs in each country, there seems to be a project called Multi CBDC. Multi…CBDC…?

Today, I will summarize the basics of such a quick overview of the different types of CBDC.

See below for a description and link to the CBDC tracker.

CBDC has two types: Retail and Wholesale

CBDC is a legal tender issued by the central bank.

CBDC can be broadly classified into two types: Retail, which is for general use, and Wholesale, which is used for financial institution-to-financial institution payments.

To take it a bit further, the retail type is a CBDC that can be held and exchanged by individuals and businesses away from financial service institutions, while the wholesale type is a CBDC that can only be used to transfer funds between the central bank and financial institutions that have accounts with the central bank.

Point: While the retail type aims to provide inexpensive and quick domestic person-to-person remittances and store-to-store payments, the wholesale type aims to digitize deposits (reserves) held by private financial institutions at the central bank.

The reason multiple CBDC projects are being developed in one country is that retail and wholesale research is taking place simultaneously. They have different applications and are likely to coexist in the future. In Japan, Digital Yen, a retail CBDC project, and Stella, a wholesale CBDC research and development project, are also underway.

KPMG estimates that wholesale development is more advanced than retail development because it is more difficult to take measures to avoid a survival crisis for private banks due to the issuance of retail CBDCs.

Until now, only recognized financial institutions have been able to do business with the central bank, but the issuance of retail CBDCs, as currently designed, would allow the central bank to exchange money directly with non-bank entities. This would diminish the raison d’etre of commercial banks.

In response to this issue, on July 14, 2022, Bank of France Governor François Villeroy de Galhau stated that “the digital euro (retail CBDC) should not mean the disappearance of commercial bank money. He stated that the relationship between the central bank and commercial banks should be maintained as before, and that the central bank should not be responsible for the management of individual accounts.

mCBDC: A mechanism to interoperate multiple CBDCs

Growing importance of mCBDCs worldwide

I know that there are two types of CBDC. So what about mCBDC?

Here is an example of mCBDC. The mCBDC Bridge project, spearheaded by the BIS (Bank for International Settlements) Innovation Hub Hong Kong Center, is a mechanism for exchanging wholesale CBDCs issued separately by several central banks (Hong Kong Monetary Authority, People’s Bank of China, Bank of Thailand, and Central Bank of UAE).

In addition to domestic transactions, wholesale CBDCs have a role in cross-border transactions (transactions conducted across borders). The concept of interoperating CBDCs in multiple countries is what the BIS calls mCBDC.

mCBDC (Multiple Central Bank Digital Currency) is a term coined by the BIS. The name may be misleading, but it is not a digital currency shared by multiple countries.

Now, let’s check the progress of each country’s CBDC with the Atlantic Council’s CBDC Tracker.

Comparing April 2021 to May 2022, the number of countries entered increased from 74 to 109, with a slightly higher percentage of launches due to Bitt Inc.’s DCash being used in seven Bahamian countries, but overall progress is evident.

The BIS reported in early May 2022 that “more than half of the world’s central banks are currently developing or specifically experimenting with digital currencies.” Although development of retail CBDCs in Singapore, Denmark, and Finland has been suspended, wholesale CBDCs continue to be in demand in those countries as well.

As CBDC development continues on a global scale, the importance of mCBDCs is growing.

Three models of mCBDC

The mCBDC model design proposed by the BIS Innovation Hub, created in 2019, is divided into three phases.

  • Model 1 “Enhanced compatibility”
  • Model 2 “Interlinking”
  • Model 3 “Integration into a single system”

Let’s take a look at each conceptual diagram in the BIS report.

Model 1: “Enhanced Compatibility”. The emphasis is on the ability to provide technical and institutional compatibility. This is a method of standardization in which different CBDC systems are connected by private telecommunication and clearing services.

Model 2 “Interlinking”. This is a method of conducting one-to-one transactions through a common interface or settlement system.

Model 3: “Integration into a single system”. This method builds a common system that can exchange multiple CBDCs.

Leading national CBDC development groups and international organizations such as the Bank for International Settlements (BIS) and the International Monetary Fund (IMF) are building and providing such CBDC know-how on a daily basis, laying the foundation for technological progress.

International Remittance Projects Around the World

Next, let’s take a quick look around at projects related to the mCBDC.

These are projects related to coordinated cross-border transactions between countries, and all experiments use blockchain, a type of decentralized ledger technology (DLT).

Project nameAssociated BankModelParticipating OrganizationPlatform
mCBDC Bridge (mBridge)
*Formerly Inthanon-Lionrock
BIS Innovation Hub, Bank of Thailand, Hong Kong Monetary Authority, People’s Bank of China, Central Bank of the United Arab Emirates3A total of 22 commercial banks and other institutions from various countriesHyperledger Besu
Inthanon-LionrockBank of Thailand, Hong Kong Monetary Authority
*Thailand: Inthanon、Hong Kong: Lionrock
38 commercial banks from Thailand and 2 from Hong KongPhase1: Corda、Phase2: Hyperledger Besu
(Formerly, Inthanon: Corda、Lionrock: Ethereum)
DunbarBIS Innovation Hub, Monetary Authority of Singapore, Reserve Bank of Australia, National Bank of Malaysia, South African Reserve Bank3R3、PartiorCorda、Quorum
*Formerly Helvetia
BIS Innovation Hub, Swiss National Bank, Bank of France2Accenture、Credit Suisse、Natixis、R3、SIX Digital Exchange、UBSCorda
HelvetiaBIS Innovation Hub, Swiss National Bank35 commercial banks from Switzerland and 2 from the U.S.Corda
Jasper-UbinBank of Canada, Monetary Authority of Singapore
*Canada: Jasper、Singapore: Ubin
2JP Morgan、AccentureSingapore: Quorum、Canada: Corda
AberSaudi Arabian Monetary Agency, Central Bank of the United Arab Emirates33 commercial banks from Saudi Arabia and 3 from UAEHyperledger Fabric
StellaBank of Japan, European Central Bank2Hyperledger Fabric、Corda、Quorum、Elements
Bank of France, Monetary Authority of Singapore3Onyx(JP Morgan’s Digital Currency and Blockchain Technology Division)Quorum

Details of each project are omitted here.

Two of the projects listed in the table above are currently underway: the mCBDC Bridge and Dunbar, both spearheaded by the BIS Innovation Hub. The other projects have already completed their demonstration tests.

One project not listed in the table is a blueprint (future plan) called Nexus, jointly announced by the BIS Innovation Hub, the Monetary Authority of Singapore, and the National Payments Corporation of India.

Other private sector projects include Partior, a joint venture between the Development Bank of Singapore (DBS), JP Morgan, and Temasek, a blockchain-based interbank payment network; Marketnode, a joint venture between the Singapore Exchange (SGX) and Temasek These include. Launched by the Monetary Authority of Singapore in June 2022, the first pilot of Project Guardian, led by Marketnode, the Development Bank of Singapore and JP Morgan, focuses on exploring the potential of DeFi applications in the wholesale funding market.

I have compiled a list of private companies involved in retail CBDC development for your reference.

Examples of technology providers currently conducting CBDC demonstrations: R3、IBM/Linux Foundation、JP Morgan、ConsenSys、Soramitsu、Ripple、Stellar、Bitt Inc、G+D(Giesecke & Devrient)、eCurrency Mint、Ground X(Kakao)、Universa、Roberto Giori Company、ProsperUs、NZIA、IZNES、Feitian Technologies

For your information, the definition of CBDC using blockchain technology is shown in the figure below.

This money flower classifies money based on a combination of four criteria: widely accessible, digital, issued by a central bank, and token-based. The fact that the cash we use every day is also considered token-based makes us think about what exactly money is.

This is a brief explanation of CBDC’s classification and international settlement projects. See you soon.

The most important keyword is “Overledger”!


“Central bank digital currencies” (2018) / CPMI

“Central bank digital currencies for cross-border payments” (2021) / BIS

“Inthanon-LionRock to mBridge” (2021) / BIS

BIS Bulletin No.49 “Interoperability between payment systems across borders” (2021) / BIS

Project Aber Final Report (2020) / Saudi Central Bank and Central Bank of the U.A.E.

Project Helvetia Settling tokenised assets in central bank money (2020) / BIS, SIX

Project Helvetia Phase II Settling tokenised assets in wholesale CBDC (2022) / BIS, SIX

中央銀行デジタル通貨とは何ですか? / 日本銀行

“中央銀行デジタル通貨(CBDC) デジタル通貨の躍進とマネーの未来” / KPMG

“CBDCによるクロスボーダー決済改善に向けた国際的な取り組みについて” / 国際通貨研究所

*Other news sites of various companies