Central Bank Digital Currencies under Blockchain Technology: Discussion of Digital Bank Runs and Design Principles

Abstract

The rising of digital currencies and the technology behind them, “blockchain,” draws much attention in many areas. According to the 2021 report of BIS, 86% of the participant central banks are actively researching the potential in this technology. This study attempts to shed light on possible expansion in monetary policy tools by the issuance of CBDC. Thus, it suggests a partial substitution of paper currency. Four design principles have been stated and discussed for a monetary system that includes CBDC and possible solutions regarding the digital bank run.