For Asia-Pacific, this overview of current payment system usage patterns and CBDC attributes suggests two key considerations that public authorities must consider for a viable level of CBDC adoption:
First is a design that is user-centric and future-proof. Advanced digital and payment infrastructure, combined with the widespread use of e-commerce and fintech in the region make it imperative that CBDCs meet the needs of an increasingly digitalized society. CBDC design, therefore, must allow for easy adaptation to technological changes. At the same time, the enduring appeal of cash, even in Asia-Pacific economies with a high level of digitalization, suggests that CBDCs need to address concerns for transactional privacy and incorporate physical cash’s usability features more broadly (eg, offline access).
Current CBDC experiments and experiences suggest that there can be fruitful design combinations. For example, Project Rosalind of the BIS Innovation Hub London Centre is exploring voice-authenticated payments and cognitive accessibility for inclusion. Project Tourbillion from the BIS Innovation Hub Swiss Centre makes use of “blind signatures” that allow central banks to issue retail CBDCs without knowing the identity of the holder. The project also uses “mixed networks” that prevent the traceability of communications between customers, banks and central banks.
Second, CBDC design must internalize bank-specific considerations that are different from end-user considerations. There are competition concerns – eg, potential disintermediation or crowding out of banks and PSPs by CBDCs. There are also revenue concerns – eg, payment service fee income for banks could come under pressure from CBDC issuance. Finally, there are incentive issues – ie, intermediaries may not find it profitable enough to participate in the CBDC architecture.
The introduction of Pix – Brazil’s fast payment system – suggests that banks and PSPs need not suffer if digital payments, including CBDCs, are suitably designed. Pix is positioned as an alternative to existing payment instruments that helps reduce transaction costs. While banking fee income, including revenues from domestic TED payments (Transferência Eletrônica Disponível – is an electronic transfer method that allows for real-time money transfers between bank accounts with no limit on the transaction amount), had initially stagnated after its introduction, banks’ service fee income, including Pix fees and non-payment revenues have grown since November 2020 as Pix usage increased swiftly.