BIS Proposes Retail CBDC Hybrid Architecture

The Advisory Group on Innovation and the Digital Economy of the Bank for International Settlements (BIS) recommends a hybrid architecture for a retail central bank digital currency (CBDC), issued and governed by the central bank, with commercial banks providing consumer services. The report proposes a modular approach to design, with a focus on a token-based model for privacy protection, while supporting an account-based model where user identity information is retained at a private intermediary for privacy protection. Despite the proposed privacy safeguards, CBDCs are still widely regarded as contrary to the idea of decentralized finance, raising concerns about systemic risk, privacy, and feasibility.