Analogizing Digital Currency

As CBDCs develop, more attention is being paid to their offline deployment. In a sense, we are looking for a way to analogize a digital currency. One idea, from 2013 and before the rise of CBDCs, was to create denominated Digital Currency Notes.

In the article, "Official Digital Currency," three Pakistani scholars presented a system where cash and a proto-CBDC would work in tandem and be interchangeable, depending on a consumer's need.

The central bank would generate Digital Currency Notes with each having a serial number. They were basically digital versions of paper banknotes. These digital notes would save money by not being subject to counterfeiting, reducing the number of banknotes needed to be printed, reducing remittance costs, and reducing the cost of safekeeping or loss. And, you could exchange a 10 rupee digital note for a paper note and vice versa as needed. Also, using a banknote model would make the CBDC more comprehensible to those used to using only cash.

There are a lot of problems with this system, but I found the idea of denominating a CBDC very original and kind of in the spirit of the idea of hybrid banknotes.