NEW YORK, April 27, 2023 /PRNewswire/ — Central banks are faced with the ongoing debates – Should retail and wholesale clearing and settlement of CBDC payments be separated?
Should the CBDC be account or token-based?
The differentiation doesn’t matter to the average citizen user. Their primary concern is to have a straightforward, secure, and all-encompassing solution that enables them to transfer value easily and affordably, regardless of their access to a bank or mobile/internet connectivity.
By bridging wholesale and retail CBDC, a single rich data format can be implemented, eliminating discrepancies that exist today across payment systems. As a result, interoperability between various types of CBDC and non-CBDCs will be easier if there is a seamless issuance layer covering wholesale and retail, account and token-based CBDCs conversion, ensuring the instant, secure, truly inclusive and smooth flow of cross-border and cross-asset payments.
Bridging account and token CBDCs for seamless wholesale-to-retail and retail-to-wholesale payments
Putting an end to the ongoing debates, Fluency has developed a ground-breaking solution capable of bridging token and account-based CBDCs, called Aureum Core.
“To meet the needs of retail markets, Central Banks are leaning towards an account ledger-based CBDC model to eliminate limitations of token-based systems while also exploring the use of a “bridge” to convert wholesale tokens to and from retail account payments deployed on the blockchain,” said Fluency.
Token-based platforms are not specifically designed for a so-called retail CBDC
Although there have been numerous retail CBDC solutions conducted over the last few years, none of the token-based approaches has been able to fully resolve the challenges and limitations associated with reliably providing secure and continuous dual offline transactions to retail users while avoiding double spending issues making it clear that the token-based platforms are not specifically designed for a so-called retail CBDC (Riksbank Phase 2 e-krona project).
Fluency’s solution provides a bridge to which wholesale token CBDCs could integrate by deploying a seamless conversion bridge to account retail CBDC enabling;
- 24/7/365 online and offline capability (when both payee and payer are offline without an internet/mobile connection)
- consecutive transactions (both online and offline)
- no double spending issues
- enhanced privacy features
Offline functionality is mandatory for intermediaries that will distribute CBDC
According to the digital euro progress report published by the European Central Bank on 24 April 2023, the provision of offline payments as a core service will be mandatory for intermediaries that distribute CBDC.
Fluency Aureum is currently the only CBDC technology that is able to facilitate dual offline (when both payee and payer are offline without an internet/mobile connection) consecutive payments without the fear of double spending issues that a token CBDC presents due to its account ledger-stored nature.
Inga Mullins, CEO at Fluency, said: “Specifically for CBDCs, our solution offers central banks and those within the financial ecosystem a straightforward means of connecting their internal networks with all other payment systems across the globe via a single issuance layer, thereby ensuring swift and seamless domestic and cross-border transactions.
Adopting an innovative DLT-stored account-based CBDC such as Aureum eliminates the most critical security risks within a token-based solution while enabling a single issuance layer to provide a smooth and instant wholesale token exchange to retail account-based CBDC. We believe our account ledger-based CBDC solution can offer a seamless CBDC transaction flow between wholesale and retail on a highly scalable model”.
Fluency is an appointed member of the world’s key CBDC boards working directly with the major central banks and governments on their CBDC design features, implementation strategy and policy for 23 countries globally including the European Central Bank and the Bank of England.