The global economy’s rapid digitization has made evident the many issues and opportunities that exist with financial system modernization. A key driving technology for this modernization has been distributed ledger technology (DLT). This paper will outline how central banks and governments around the world can implement minimum viable products with regards to value adding initiatives built for wide reaching financial and capital market systems utilization with distributed ledger technology. The first section in the paper will be introductory in nature and provide information on the different use cases available and compelling with regards to a focus on the financial sector. The second section in the paper will provide additional details and frameworks for implementing the most scalable and widely relevant use cases. There will be an emphasis on emerging market economies throughout the paper.
This paper proposes how bitcoin-backed fiduciary currency could be adopted by Central Banks and the various consideration points therein. The paper draws comparisons from the proposed Bitcoin Standard to the Classical Gold Standard once implemented by most major modern economies throughout the late 19 and early 20 century.
The document will explore the expected impact to financial markets from central bank backed real time gross settlement (RTGS) for securities and payments transactions.
The document will explore known and theoretical solutions for offline digital currency payments, in addition to their expected financial system impacts.
The document will explore several security and privacy considerations for a central bank digital currency (CBDC) deployment, outlining key issues related to how nodes communicate with each other and how each node operates individually.
Overall, the recent Bank of England paper displays peer-leading expertise on central bank digital currency. I personally applaud the Bank of England for its serious and literal commitment to exploring CBDC as a concept and its potential added value to the UK economy. Below are Satoshi Capital Advisors' general comments on the paper in addition to responses to the questions listed in Chapter 7.