Central bank digital currency (CBDC) has become an increasingly discussed topic over the past few years, with multiple central banks examining and in some cases publicly discussing the implications of creating or backing one. At R3, we are working with both the Bank of Canada ("CAD-coin") and the Monetary Authority of Singapore on CBDC-related projects, along with other efforts yet to be announced.
There are roughly two different models for CBDC that are commonly conflated. The first is "The CAD-coin Model" (note: it is not an actual coin), where a central bank issues a currency against some of its assets. The second model is popularly known as "Fedcoin", where a central bank issues a new type of currency that becomes a liability on its balance sheet. This Fedcoin model is the topic covered by the new R3 "Fedcoin" paper by JP Koning, which we have released publicly today (see below).
Koning "coined" the term Fedcoin in 2014. While Fedcoin and "CBDC" have been used interchangeably, they are distinct. Especially as Fedcoin has some of the same characteristics of physical cash today, namely in terms of pseudonymity and potential anonymity.
The R3 Research team enjoyed collaborating with JP Koning on this paper, which was released to our members in November of last year. We would also like to thank Rod Garratt, a member of the R3 Academic Advisory Board, for his help in putting this paper together.
Below is a link to Koning's paper as well as a companion piece written by Antony Lewis, who is our APAC Director of Research.
American Banker got a first look.
Fedcoin: A Central Bank-issued Cryptocurrency
Fedcoin: A Central Bank-issued Cryptocurrency - R3 Perspective