What Is and Isn’t a *Wholesale* Central Bank Digital Currency?

In a previous post I discussed what is and isn’t a retail central bank digital currency (rCBDC): A broadly available general purpose digital payment instrument, denominated in the jurisdiction’s unit of account, that is a direct liability of the jurisdiction’s monetary authority, and subject to the same rules and regulations as imposed on the jurisdiction’s other units of account. The gist of this is summarized in the following table.

I then went on to describe wholesale central bank digital currency (wCBDC) as being like an rCBDC, but being restricted to wholesale, financial market payments. But some will notice that I never mentioned the technology platform – whether it runs on a centralized or decentralized ledger, or whether there is even a ledger at all (i.e., “token” based). And that’s because discussions around rCBDC are generally agnostic about the platform type. However, it’s my sense that that is not the case for wCBDC.

And that may be because wCBDC is not really anything new. For example, a 2018 IMF staff discussion note characterized central bank reserves as a “wholesale form of CBDC used exclusively for interbank payments” which has been around for ages. And in 2020, ECB legal staff noted that “the issuance by central banks of digital liabilities and the corresponding holding, by third parties, of intangible money claims against the balance sheet of the digital liability-issuing central bank would not represent a genuine novelty.”

And a 2020 paper that surveyed wCBDC research found that “the overarching motivation for CBDC research by CBs is to assess the impact of distributed ledger technology (DLT) on financial market infrastructures (FMIs). Which all implies to me that when people say “wholesale CBDC” they really mean to say is “distributed ledger technology (DLT) based wholesale CBDC. This may be a trivial discussion but when we say “retail CBDC” we encompass all platforms (centralized, distributed and token-based) and as everyone knows I’m a stickler on definitions!

And although I don’t follow wholesale CBDC developments closely, I’ve tabulated below the experiments that have popped up in my Daily Digest. If I’ve missed any, please let me know in the comments! FYI I plan to keep the table updated on my Kiffmeister Chronicles blog. That’s also the best version of the table to use if you want to follow the live links in the “references” section.

4 thoughts on “What Is and Isn’t a *Wholesale* Central Bank Digital Currency?

  1. Dear Kiffmeister

    Thanks for your great blog. I am learning so much. As I am currently writing a textbook, I’d like to ask the following questions.

    As in CBDC it seems to be rather irrelevant what technology it is based on. I wonder though: What are the benefits of launching a CBDC on a DLT technology? Could it be that programmability is only achievable through smart contracts, which are based on a DLT?

    I’d be interested to hear your thoughts or maybe you have some papers dealing with this question.



    1. Thanks Pascal, both of your questions are answered in the IMF working paper I co-authored (see link below). Section IV.B and Box 2 cover your first question (benefits of DLT-based CBDC) and Section IV.F covers the second (programmability): https://www.imf.org/en/Publications/WP/Issues/2020/06/26/A-Survey-of-Research-on-Retail-Central-Bank-Digital-Currency-49517

      You might also look at this 2020 Bank of England paper, which claims that non-DLT CBDC can be programmed: https://www.bankofengland.co.uk/paper/2020/central-bank-digital-currency-opportunities-challenges-and-design-discussion-paper


  2. Dear Kiffmeister

    Thank you very much for your response. I will surely take a look at these papers. One thing I was also looking for but haven’t found a satisfactory answer for is the case for a wholesale CBDC. I keep on reading that a wholesale cbdc on dlt can make today’s wholesale system with RTGS more efficient and more liquidity-efficient. But I have not really found any paper explaining how exactly this efficiency looks in reality. Would you know a paper on this as well?



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