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Cover Letter
I. Front Matter
a. Cover Page
b. Legal Responsibility
c. Summary of Changes
d. Abstract
e. Copyright Notice
f. Contents
g. About Content Providers
h. Preface
II. Main Document
1.0 Introduction
2.0 Methodology
3.0 White Paper Analysis
4.0 Common Elements
4.1 Stakeholders
4.2 Currency Models
4.2.1 Digital Cash Model
4.2.2 Digital Account Model
4.3 Stablecoins
4.4 National Privacy Considerations
4.5 National Security Considerations
4.5.1 Human Trafficking
4.5.2 Drug Trafficking
4.5.3 Corruption
4.5.4 Money Laundering
4.6 International Considerations
4.6.1 Data Residency
4.6.2 Data Localization
4.6.3 Data Sovereignty
4.7 Dual Payment Networks
5.0 Questions and Responses
5.1 Benefits, Risks, and Policy Considerations
Question: 01. What additional potential benefits, policy considerations, or risks of a CBDC may exist that have not been raised in this paper?
sub-Q1: Benefits
sub-Q2: Policies
sub-Q3: Risks
Question: 02. Could some or all of the potential benefits of a CBDC be better achieved in a different way?
Question: 03. Could a CBDC affect financial inclusion? Would the net effect be positive or negative for inclusion?
Question: 04. How might a U.S. CBDC affect the Federal Reserve’s ability to effectively implement monetary policy in the pursuit of its maximum-employment and price-stability goals?
Question: 05. How could a CBDC affect financial stability? Would the net effect be positive or negative for stability?
Question: 06. Could a CBDC adversely affect the financial sector? How might a CBDC affect the financial sector differently from stablecoins or other nonbank money?
Question: 07. What tools could be considered to mitigate any adverse impact of CBDC on the financial sector? Would some of these tools diminish the potential benefits of a CBDC?
Question: 08. If cash usage declines, is it important to preserve the general public’s access to a form of central bank money that can be used widely for payments?
Question: 09. How might domestic and cross-border digital payments evolve in the absence of a U.S. CBDC?
Question: 10. How should decisions by other large economy nations to issue CBDCs influence the decision whether the United States should do so?
Question: 11. Are there additional ways to manage potential risks associated with CBDC that were not raised in this paper?
1. Risk of a Software Crisis
2. Risk of Lack of Stakeholder Buy-In
3. Risk Due to Poor Community of Interest (CoI) Governance
4. Risk Due to lack of Broad, Wide-Ranging Security Planning
5. Risk of Data being hacked due to weak Security Infrastructure
6. Risk of Meta-Data being hacked due to weak Security Infrastructure
7. Risk of Business Processes Being Hacked
8. Risk of competing Currency Models for the CBDC
Question: 12. How could a CBDC provide privacy to consumers without providing complete anonymity and facilitating illicit financial activity?
Question: 13. How could a CBDC be designed to foster operational and cyber resiliency? What operational or cyber risks might be unavoidable?
1. How could a CBDC be designed to foster operational and cyber resiliency?
2. What operational or cyber risks might be unavoidable?
Question: 14. Should a CBDC be legal tender?
5.2 Design
Question: 15. Should a CBDC pay interest? If so, why and how? If not, why not?
Question: 16. Should the amount of CBDC held by a single end user be subject to quantity limits?
Question: 17. What types of firms should serve as intermediaries for CBDC? What should be the role and regulatory structure for these intermediaries?
Question: 18. Should a CBDC have “offline” capabilities? If so, how might that be achieved?
Question: 19. Should a CBDC be designed to maximize ease of use and acceptance at the point of sale? If so, how?
Question: 20. How could a CBDC be designed to achieve transferability across multiple payment platforms? Would new technology or technical standards be needed?
Question: 21. How might future technological innovations affect design and policy choices related to CBDC?
Question: 22. Are there additional design principles that should be considered? Are there tradeoffs around any of the identified design principles, especially in trying to achieve the potential benefits of a CBDC?
6.0 Recommendations
6.01 Elaborate the Newly Known Risks
6.02 Move from Desirements to Requirements
6.03 Establish a Consortium
6.04 Formally Define Stakeholders
6.05 Formally Define Non-Functional Requirements
6.06 Formally Define Functional Requirements
6.07 Refine Applicable Laws and Regulations
6.08 Instill Confidence in the CBDC
6.09 Baked-in Security
6.10 Adopt a Model-Based Systems Engineering (MBSE) Approach
6.11 Perform Research Development Test & Evaluation (RDT&E)
6.11.1 Consensus Algorithms
6.11.2 Artificial Intelligence (AI)
6.11.3 Ontologies
6.11.4 Smart Contracts
6.11.5 Complex Data Models
6.11.6 Understanding Gas Implications
6.11.7 Simulation, Training and Testing Environment
6.11.8 Build Reference Implementation (RI)
6.12 Defining the Appropriate Standards or Specifications
III. Appendices
Appendix A: Acronyms
Appendix B: Glossary
Central Bank Digital Currency (CBDC)
Central Bank Money
Commercial Bank Money
Consumer Privacy
Financial Crimes
Identity-verified
Intermediated Model
Nonbank Money
Privacy-Protected
Real-Time Payments (RTP)
Transferable
Appendix C: Other Transaction Authority (OTA)
Appendix D: Model-Based Systems Engineering (MBSE)
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