Fastest News Updates around the World

MIT releases the CBDC report after extensive research


- Advertisement -

A group of researchers under the Massachusetts Institute of Technology (MIT)’s Digital Currency Initiative (DCI) has come up with a detailed report on the comprehensiveness of designing a retail central bank digital currency (CBDC).

Compare CBDCs with intermediary and non-intermediary forms of payment

The study was conducted by MIT and Maiden labs over a 15-month period in four low- and middle-income countries. The countries are Nigeria, India, Indonesia and Mexico.

The researchers looked at three aspects of CBD based on actual life examples of people in the study countries. This included the existing financial infrastructure, CBDC design options, and user experience.

In addition, the study explicitly emphasized the differences between intermediate and non-intermediate (cash) forms of payments. These differences arose by comparing five conformations (what the user can do with the technology) in intermediate and non-mediated systems.

Other areas of comparison were the actual global application of the two systems and the challenges they pose to at-risk users.

Concerns about CBDC use

Given that all of the six CBDC pilot projects and projects in operation today use intermediate design models, the group came up with several CBDC weaknesses.

One of the issues raised by the report is the repetition of the harms of existing forms of digital currency payments.

The authors emphasized that there is a potential risk of CBDC intermediaries operating by designing an exact copy of existing intermediary payment methods. Therefore, being of identical composition, CBDCs will inherit the problems of existing monetary systems.

This project also reiterated the conclusions of DCI’s first report from Project Hamilton.

This preliminary research concluded that governance and trust are major challenges in the use of distributed ledger technology (DLT). The authors added that some performance issues would also contribute to concerns about the use of DLT technology rather than its ability to achieve certain features.

However, the authors note that a major challenge to the use of CBDCs is the lack of trust generated by the growing lack of trust in government.

Leave a Reply

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More