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Central Bank Issued Digital Currency: Challenges for Security and Interoperability

International Telecommunication Union (ITU)

Session 304

11:00–12:45, Friday, 23 March 2018 Popov Room 1, ITU Tower Thematic Workshop Speakers/Panellists  Link to WSIS Action Lines  Link to SDGs  Summary Document  Related Links 

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Private digital currencies combine new payments systems with new currencies that are not issued by a central bank. One example of a well-known privately issued digital currency is Bitcoin. Just like paper currency and coins, a  central bank issued digital currency (CBDC) would be fixed in nominal terms, universally accessible, and valid as legal tender for all public and private transactions. Consequently, CBDC is essentially different from the other digital currencies created by private entities such as Bitcoin. This session will consider the differences between cryptocurrencies and Central Bank issued digital currency. The main objective of the session is to provide a broad perspective of the main challenges facing central banks in issuing digital currency from an interoperability, policy and regulatory and cybersecurity perspective.

ITU has set up a Focus Group on Digital Currency including digital fiat currency to study the digital currency ecosystem and identify areas where standards are needed. The session will also discuss technical measures and standards that can be implemented to address these issues and to ensure the security of financial transactions.

Some of the questions that will be considered are:

  • What is central bank issued digital currency?
  • What are the characteristics of central bank issued digital currency v/s private digital currency (e.g Bitcoin)?
  • What are the benefits for central bank issued digital currency?
  • What are the interoperability and security challenges for central banks to issue digital currency?
  • What are the security threats for digital currency and how can these be overcome?

 

Moderator

Vijay Mauree, Programme Coordinator, TSB, ITU

Speakers/Panellists

  • "Central Bank Digital Currencies: What is it about?" - Dr Daniel Reiss, Visiting Member of Secretariat, CPMI, Bank for International Settlements
  • Dr David Wen, Chairman, ITU-T Focus Group Digital Currency, Including Digital Fiat Currency (FGDFC)
  • "Central Bank Digital Currencies - Risks and Implications"- Dr Klaus Loeber, European Central Bank
  • "Quantum threats and possible solutions for blockchains and digital currencies" - Dr Bruno Huttner, QKD Expert, ID Quantique
  • "Interoperability, Security and Privacy on Distributed Systems" - Mr Paul Neubecker, CFO, HX Foundation and Hybrid Network

Session's link to WSIS Action Lines

  • AL C5 logo C5. Building confidence and security in the use of ICTs
  • AL C6 logo C6. Enabling environment

The Session will consider the challenges which Central Banks face with regards to the regulatory, interoperability and security for digital currency. The Session will address the developments at international level in developing standards for Central Bank issued digital currency and discuss its characteristics and requirements for interoperability and security.

Session's link to Sustainable Development Process

  • Goal 1: No poverty logo Goal 1: End poverty in all its forms everywhere
  • Goal 16: Peace, justice and strong institutions logo Goal 16: Promote just, peaceful and inclusive societies

Mobile money and other digital financial services are becoming one of the main telecommunication/ICT success stories for socioeconomic development of many nations, especially in developing countries. The use of mobile phones for mobile financial services offers opportunities to enhance growth and development. In the meantime, mobile financial services can provide benefits to the telecommunication/ICT industry by making it the indispensable infrastructure for future financial services for everyone. Many Central Banks including the Federal Reserve Bank of United States, Bank of England, and People’s Bank of China have all stated that they are researching and working on a central bank issued digital currency. Implementations of DFC using different technology and are in different phases of deployment. Like fiat currency in paper form that played a key role for financial inclusion for the past centuries, and continuing doing so, a digital fiat currency must also be accessible by all citizens of a country and could be a catalyst to accelerating interoperability in digital financial services and further help in bridging the financial inclusion gap and provide more financial stability. This would ultimately help in enhancing socio economic growth and more transparency in managing government funds disbursement and control over counterfeiting money.

Session Summary

CB_Outcomes_Template_WSIS_2018.pdf

Documents

Links

Link to this session