A Taxonomy of Design Decisions for Central Bank Digital Currencies

Stamm, Laura Katharina; Koelmann, Holger

Abstract

In recent years, the amount of research on Central Bank Digital Currencies (CBDCs) by central banks has increased extensively. These can cover a broad range of applications, from the settlement of mass transactions to interbank payments. Depending on the design, different objectives can be pursued when introducing a CBDC, such as financial inclusion or enhancing payment efficiency. Although first attempts to organize the design aspects of CBDCs have been conducted, there seems to be no construct that comprehensively characterizes the essential design decisions. Considering both conceptual and empirical sources, we address this shortcoming by developing a taxonomy that represents and characterizes the fundamental design decisions to be made by central banks when creating a CBDC. The taxonomy enables its users to classify CBDCs and compare existing configurations. Moreover, it supports the derivation and discussion of implications as well as interactions between design decisions. The article thereby contributes to the existing literature by enhancing the understanding of the concept of CBDC, thus strengthening the conceptual foundation for future research. Furthermore, our findings can support the development of further frameworks addressing their design at a more profound level.

Keywords
central bank digital currency; taxonomy; digital asset; financial sector digitalization