Clifford Chance

Central bank digital currencies - a new type of intermediary

25 September 2023

As the global thinking in respect of central bank digital currencies (CBDCs) evolves, models for public-private collaboration for distributing CBDCs are becoming clearer. This includes proposals by the Bank of England as well as the recent ground-breaking Project Sela from the Bank for International Settlements (BIS) Innovation Hub, the Bank of Israel and the Hong Kong Monetary Authority (HKMA), which aimed to reduce financial exposure for retail CBDC intermediaries by developing a model where they are not required to hold client assets.

This has the effect that CBDCs are treated as closely as possible to physical cash and potentially paves the way for a more accessible CBDC system. Clifford Chance was delighted to advise the BIS Innovation Hub on this significant project.

In this briefing we explore these developments, and analyse the legal architecture and regulatory framework that may be required to facilitate structures when intermediaries do not hold CBDC (or other assets) belonging to their clients.

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