According to McKinsey, four-fifths of the world’s central banks have issued or experimented with Central Bank Digitial Currencies (CBDC). The European Central Bank announced in July this year it is progressing with a digital euro, which simply is a euro in digital form rather than a note. The ECB has already experimented on the digital euro ledger; privacy and anti-money laundering; limits on digital euro in circulation; end-user access while not connected to the internet and facilitating inclusiveness with appropriate devices. It found no major technical observations.
In Singapore, the Monetary Authority of Singapore and local and foreign banks have experimented with the digital SGD in Project Ubin, initially for interbank payments and subsequently in cross border transfers. The MAS has now progressed to Project Dunbar with other central banks to experiment with mCBDCs or multiple CBDCs for cross border payments.
Like the so-called cryptocurrencies, these CBDCs are produced by decentralised or distributed ledgers. Blockchain is a form of distributed ledger. Bitcoin and other cryptocurrencies are minted by these distributed ledgers. Ledgers are simply an account of transactions. Digital distributed ledgers are an account of transaction in a digital format, where each transaction - or node - is immutable, that is, it cannot be changed, An immutable ledger provides data security and proof that the data has not been altered.
