The Bank for International Settlements (BIS) has unveiled a comprehensive framework for designing 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 the Digital Economy (CGIDE), the report provides a roadmap for central banks in America and globally as they explore this evolving financial instrument.
Hybrid model
The hybrid approach proposed in the report allows central banks to maintain governance over CBDC issuance and infrastructure, while delegating user-facing responsibilities to private intermediaries.
These intermediaries would provide functions such as Know Your Customer (KYC) verification, portfolio management and transaction facilitation. This model provides efficiency and scalability while addressing concerns about user privacy and anti-money laundering (AML) compliance.
The architecture includes four core processes: user enrollment, CBDC issuance (cash-in), CBDC withdrawal (cash-out), and intra-ledger transfers.
Notably, 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 options, a key feature of the proposal, are intended to expand access to underserved, unbanked populations. According to the report:
“The hybrid model bridges the gap between centralization and decentralization, offering resilience, accessibility and enhanced privacy protection.”
Programmable and tokenized assets
The BIS report highlights the advanced functionalities that CBDCs could bring to the financial ecosystem, including programmability through smart contracts, tokenization of assets and seamless integration with DeFi.
According to the report, these features could improve liquidity, automate transactions and create new financial arrangements, positioning CBDCs as fundamental tools for modern economies.
For example, tokenized CBDCs could simplify financial settlements by enabling atomic transactions, eliminating the need for multi-step reconciliation processes. They can also facilitate cross-border payments, reducing costs and processing times while promoting greater competition and efficiency.
The report highlighted that a programmable CBDC platform could transform supply chain finance and support innovations such as conditional payments. It drew on global experiences, citing Jamaica’s JAM-DEX, China’s e-CNY and Peru’s offline pilot program targeting rural areas.
Technical challenges were also addressed, 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 encourage dialogue and feedback among stakeholders.
