Smart Contract Summit 2021: Central Bank Digital Currency (CBDCs) and Blockchain Panel

SCRF was invited to host an independent research track as part of the 2021 Smart Contract Summit. We chose to present five panel discussions that touch on some of the most timely issues facing the blockchain space: “Identity and Reputation”, “Governance Theory”, “Governance Implementation”, “Privacy and SNARKS”, and “CBDCs and Blockchain”.

In this series of threads, we will be providing some deeper insight into the panel topics, the participants, and where interested viewers can find their most relevant works.

What is SCRF

The Smart Contract Research Forum (SCRF) is where academics, researchers, and industry leaders from all over the world come together to discuss research, solicit thoughtful peer review, and find new projects on which to collaborate. You can find additional information about our programs, grants, and initiatives in our repo; or feel free to join us in our chat.

About the CBDCs and Blockchain Panel

Central Bank Digital Currencies (CBDCs) are currently being explored by a significant portion of Central Banks globally. This raises many questions from the specific problems that CBDCs are solving to what these solutions might actually look like. In this panel, we hear from academics from the EU and US on the current state of CBDCs, relevant concerns, and why this activity is taking place now.

Full video

Panelist info

Andrew Miller

Andrew Miller is an Assistant Professor at the University of Illinois, Urbana-Champaign, in Electrical and Computer Engineering and affiliate in Computer Science, where he leads the Decentralized Systems Lab. He’s also an Associate Director of the Initiative for Cryptocurrencies and Contracts (IC3), and a technical advisor for Chainlink Labs.

His research interests involve computer security, specifically the design of secure decentralized systems and cryptocurrencies. He combines techniques from programming languages, cryptography and distributed computing.

Some of Andrew’s work:

Relevant links for Andrew:

Ariel Zeitlin-Jones

Ariel Zetlin-Jones is an Associate Professor of Economics at the Tepper School of Business at Carnegie Mellon University in Pittsburgh, Pennsylvania. His research focuses on the interaction of finance and the macroeconomy, including an examination of the causes of financial crises and the quantitative effects of disturbances in financial markets on broader economic activity. Since 2016, Ariel has been researching the economics of blockchains: how economic incentives may be used to shape blockchain consensus as stable coin protocols as well as the novel and economically large centralized markets that currently support cryptocurrency trading. His research has been published in the American Economic Review, the Journal of Political Economy, the Journal of Monetary Economics.

Ariel holds both a Doctorate and Masters in Economics from the University of Minnesota in Minneapolis, Minnesota and a Bachelor’s degree in Political Economy and Mathematics from Williams College in Williamstown, Massachusetts.

Some of Ariel’s work:

Relevant links for Ariel:

Philipp Sandner

Prof. Dr. Philipp Sandner has founded the Frankfurt School Blockchain Center (FSBC). From 2018 to 2020, he was ranked as one of the “top 30” economists by the Frankfurter Allgemeine Zeitung (FAZ), a major newspaper in Germany. Further, he belonged to the “Top 40 under 40” — a ranking by the German business magazine Capital. Since 2017, he has been a member of the FinTech Council of the Federal Ministry of Finance in Germany. He is also on the Board of Directors of Avaloq Ventures and of the Blockchain Founders Group, a Liechtenstein-based venture capital company focusing on blockchain startups.

The expertise of Prof. Sandner includes blockchain technology in general, crypto assets such as Bitcoin and Ethereum, the digital programmable Euro, tokenization of assets and rights and digital identity.

Some of Philipp’s work:

Relevant links for Philipp:

Key Questions for our Panelists

Some of the questions we explore during the panel include:

  • What is your working definition of CBDCs or what do you see as the minimum design choices that define a CBDC?
  • What is a CBDC and how are they similar or different from other blockchain based projects?
  • What problem are CBDCs solving?
    • Consumer vs banks vs capital markets vs other stakeholders
  • How do blockchains and CBDCs interact with each other?
  • Why is the time now for CBDCs?
  • What is the current state of the CBDC narrative?
  • What are the main challenges that CBDC projects face?
  • Will CBDCs be built on top of public or private chains?
  • How will CBDCs and decentralized cryptocurrencies coexist?
  • Are there privacy considerations to be discussed?
  • Do you see a ‘race’ to roll out a CBDC with over 80 countries actively exploring or experimenting with the idea?

Can you post the date and time of this panel? Thanks!


I’m not able to find it on the public schedule right now. I’m told it’s on Thursday, Aug 5 on the innovation stage from 12:00 PM to 12:40 PM EDT.


I think there might be some last minute changes so it’s best to track their conference schedule for now. We can add a comment with the panel times closer to it as the times are finalized


Some takeaways from the panel discussion
Feel free to add/correct/contradict

  • CDBCs allow people like you and me to use money from a checking account in a central bank. (Lend, borrow, spend, save, etc.)

  • Financial services will be available by digital currency APIs from the central bank

  • This immediately changes the role commercial banks are playing. They will no longer be the only intermediary to many financial services

  • The technology would provide transparency to monetary policies

  • It would also give insight into how money flows in the economy

  • Top concerns in CDBCs include the way we handle privacy. As current policies are legacies rather than great designs

  • Sophistication of technology & administration power of banks are also important. It should protect asset holders from losing access to their rights

  • We should also explore why some people in advanced economies are unbanked, to see if CDBCs might change the game for them


That’s a great video! Thanks for sharing so many wonderful thoughts and opinions about CBDC!

The Bank for International Settlements’s definition of a CBDC as “a digital payment instrument, denominated in the national unit of account, that is a direct liability of the central bank.” is a good way to see CBDC issues from a legal perspective. It shows the distinctions between CBDC and money issued by banks, which represent banks’ liability to the retail customer. This implies there may be some saving and lending competition issues between central banks and commercial banks, and it might cause economic changes to a large extent, the systemic risk may arise from different dimensions. However, these potential problems can be solved by adjusting the CBDC issuing structure. If the status of CBDC is a substitution of cash rather than deposits may also alleviate the problems. So opinions of maintains multiple-layers system --banks as intermediaries between the central bank and retail customers-- still prevalent, it prevents large impacts mentioned above and remains diverse and competitive services among commercial banks or financial institutions, and the function of monetary policies can process without huge deviation. In this way, those advantages mentioned by speakers of taking CBDC could be more persuasive to those who have these concerns.

On the other hand, to what extent the privacy right should be protected is crucial. As we can see, democratic countries are committed to developing a system that aligns with the requirement of privacy. We hope this could be solved by technical adjustment. Also, we people need to know what the purpose of some countries taking CBDC is. There are some privacy concerns, especially in those countries that want to collect information about people or want to capture information and influence from private sectors. It may be difficult to claim or argue if we use CBDC of countries that intend to invade privacy.

The need for CBDC seems to become obvious based on the fact that payments services are prosperous. Many payment scenarios are asking for some kind of well-backed capital source. When private payment services grow like a monster, and if we don’t have CBDC, would it be another source of problems?

In addition, I’d like to share Taiwan’s central bank 9/17/2020 research report regarding CBDC. It mentioned that there are limitations in DLT-based CBDC, especially in real-time, enormous, and high-frequency transactions. It cannot meet the efficiency requirements of the payment system mainly due to privacy protection. Could the latest DLT technology resolve it?


@Fizzymidas brought up an excellent point about sovereignty in one of our Community Calls. I hope I can do this justice: apparently the Bank of Ghana is launching its CBDC project on their Independence Day but they’re using a third-party service (I think it was HyperLedger) to provide infrastructure. What would happen if the company folded? Or was bought out by a regional rival? Faith is also working on a project here at SCRF (with @Sami_B) that indexes decentralization, perhaps similar metrics or some other sort of auditing process could be applied to CBDC blockchains.


@socrates1024 I really enjoyed this panel discussion, and I was delighted to find you on here – I’ll keep this brief because I know a couple of researchers have been preparing questions, but I was hoping you could explain to me why it would be unlikely for a CBDC to use a public blockchain? Wouldn’t it be riskier to rely on a third party who’d have to build the system? Thank you so much for your time.


The Central Bank of Nigeria (CBN) has adopted various policies and released guidelines in efforts directed to control the devaluing state of the Naira. Earlier in February 2021, the CBN instructed all financial institutions to withdraw all support services for transactions involving cryptocurrencies.

The apex bank cited the need to protect the financial system and the youths from the risks inherent in crypto volatility.
Further concluding in a press release that “… *cryptocurrencies are largely speculative, anonymous *
*and untraceable, they are increasingly being used for money laundering, terrorism financing and other *
criminal activities”.

Nigeria is battling dollar shortage largely due to the disruption of international trade by the COVID-19
pandemic and dwindling oil prices. The apex bank has had to devalue the Naira thrice since 2020, a
measure that has failed to strengthen the value of the Naira.

A contributory to the fall in the value of the Naira is the preference by many to hoard foreign currencies
due to the various economic risk concerns across Nigeria. However, the continued adoption of
cryptocurrencies as store of value over this period and means of remittance may have also mildly sidelined the Naira as even the Bureau De Change Operators (BDCs) have been linked to exchange transactions to render cryptocurrencies into foreign currencies in response to restrictions trading against the Naira.

BDCs are licensed to provide retail FX services such as buying from the public and selling to users for
allowed transactions such as Personal Travel Allowance (PTA), Business Travel Allowance (BTA), medical fees etc.

Based on available data, Nigeria ranks no. 1 currently as the leading country per capita for cryptocurrency
transactions at 32% adoption rate

Nonetheless, there is a need to review the various steps and guidelines
released by the CBN which have been ineffective in strengthening the Naira.

Notable FX guidelines released in 2021
• July 2021; Ban on the sale of Foreign Exchange to Bureau De Change Operators citing grounds
that BDCs facilitate graft and corrupt activities of people who seek illicit fund flow and money
laundering in Nigeria.
• 30th August; Directive on publication of names of defaulters of the CBN policy on the sale of Forex
for Personal Travel Allowance (PTA) /Business Travel Allowance (BTA)- Directed that all banks
publish on their websites, the names and BVN of defaulting customers that present false travel
documents or cancel flight tickets without returning the purchased FX within 2 weeks.
Notable is the fact that the limit to PTA and BTA is $4,000 and $5,000 per quarter respectively.
• 28th July 2021; Restriction on licensing of new Bureau De Change Operators and refund of
minimum capital deposits/licensing fees for pending license applications.

The President of the Association of Bureau De Change Operators of Nigeria (ABCON) has made a
statement that the decision to ban sale of FX to its members is the driver for the continued inflation of
prices of goods and services in Nigeria. The ban has further restricted the supply of FX in the parallel
market as banks.
The CBN stated that the sale of $110 million weekly with allocation of $20,000 to each of the over 5,500
BDC operators in the country was taking a huge toll on the national foreign reserves. However, BDC
operators fix rates in the foreign exchange market and this influenced the restriction of the sale of forex to BDC operators.

However, the Naira has kept on losing value despite the increase in foreign reserves of the nation from a
record low of $33.09 billion in July 2021 to $34.26 billion by September 3rd 2021. This is deducible from the continuous fall in the value of the naira within a week from N520/USD to as low as N545/USD (48-year low), N745/GBP and N636/ EUR in the parallel market.

Other factors include panic buying by Forex users and BDC operators hoarding FX in anticipation of rates fluctuations due the policies.

The CBN needs to be cautious to ensure that the restrictive FX policies will not be counterproductive due to the rising demand for foreign exchange and its exploration of the national digital currency. Legitimate end users that are unable to access FX supply can rely on cryptocurrencies to remit payment for transactions that support crypto payments or cross-border remittance.

Nigeria’s CBDC (e-Naira)

The CBN engaged Bitt Inc, a Barbados Fintech based company as its Technical partner to pilot the national digital currency (eNaira). The apex bank stated that its selection of the project partner was based on the
company’s prior experience with the successful launch of the CBDC of the Eastern Caribbean Central Bank (ECCB) earlier in 2021. The selection process considered technological competence, efficiency, platform security, interoperability and implementation experience.

However, the eNaira transaction has a spending limit in three tiers (Tier 1, Tier 2 and Tier 3) with the Tier
3 having the highest spending limit. Tier 3 wallets have a transactional (sending and receiving) limit of N1 million Naira, an equivalent of about $1,850 at the parallel market rate.

With the advent of the eNaira, the CBN is targeting increased cross-border trade, accelerate financial
inclusion, tax collection, monetary policy effectiveness, cheaper and faster remittance inflow. eNaira will not operate as a store of value for users as it is a form of payment with non-interest bearing CBDC status.

Though, it is arguable that the sovereignty threat and infrastructural risks in appointing a foreign partner
should be a consideration and preference to be given rather to a local company.

Based on Executive order No.5, Government Ministries, Departments and Agencies (MDAs) are to engage local professionals in the planning, design and execution of national security projects. A provisional exception is the situation
where foreign companies with demonstrated capacity to handle such indigenous projects can be awarded the contract in preference to local professionals where they lack expertise.

Reports in the media claim that the CBN has conditioned Bitt Inc to register as a Limited Liability Company in Nigeria and the CBN will own shares in the Nigerian entity.


Wow. This explains a lot. Thank you so much

The guidelines no doubts points in the directions that the federal government have once again proven not to have trust in indigenous companies

Again, the essence of the CBDC has been faulted with lot of possible privacy risks. The country’s economic flow will be controlled by foreign establishments which the federal government has little or no control over.
Despite Bitt Inc, being licensed under the CAC, it doesn’t make them a Nigerian establishment controlled by the Nigerian government.

Also, to what extent can the traditional financial institutions handle all these regulations?. With the continued naira devaluation?

Finally, I think Nigeria is not ready for the CBDC project. This is a country of 200 million population with less than25 million of them having access to a smartphone. It is not a well thought project to begin with.


There is one question that most governments still need to answer. Excluding tracking of funds, of what use are CBDCs if they will be restricted to a particular country? Isn’t that the same as using the fiat of that country?

Although countries like China have successfully deployed their CBDCs, I do not see a need for CBDCs for the African continent. What Africa needs is better monetary and financial policies to help fuel intra-continental trades and boost the African economy.

We have seen countries like Venezuela fail with its petroleum-based cryptocurrency ‘Petro’. The coin failed to address the problem of inflation, although we can blame that on the U.S. sanctions, yet, it’s proof that CBDCs may likely not address inflation.

Like Richard Brown mentioned in the panel, there is a lot of similarities between CBDCs and stable coins why not focus on stable coins or cryptocurrency like the government of Estonia.

I believe that better policies will help the Nigerian economy in particular and Africa at large.

Why Governments should consider alternatives to CBDCs

  1. If the Nigerian government is so worried about its people using cryptocurrencies and not Naira or Dollar (as a policy banned banks from transacting with crypto entities earlier in 2021), why not tax cryptocurrencies?

My thought: Taxing crypto will not be possible when the current tax system isn’t functional.

  1. Why not utilise a blockchain such as Ripple it Stellar Lumens for cross border transactions thereby facilitating cross border transaction payments across Africa and reducing our reliance on Dollars or France CFP franc?—I must admit that there is a whole political reason why this idea may not be visible soon but it’s still a more viable option to fighting inflation.

  2. CBDCs place a limit on the users that cryptocurrency eliminates. Transacting with a currency such as the E-naira means that as a Tier three user which is the highest tier can only transact daily with about $1,850. What incentive does this give to the citizens above the normal naira? Why not create favourable regulations for cryptocurrencies?

Using the E-Naira as a case study for CBDCs, I would say, that governments still have to do a lot of homework as to whether it fits into the economical terrain of their country or not.


This is an expository write up and a very good points that should be considered.

Africa has no business with CBDC for now as there are other fundamental problems that needs to be addressed like the issues with financial and economic policies. CBDC will change little or nothing on inflation.

I am also of the opinion that Africans should look out for Africans to solve Africans problem. Not some folks from a distant location telling Africa what to do.


Thankfully, the deployment of the Enaira CBDC has been postponed to an unforeseen future. This is good news as it would have served as an example of what not to do when launching a CBDC. Hopefully, the government and stakeholders can review the project better and make needed adjustments before redeployment.


I don’t think Nigeria is actually serious about this e-Naira, I think it’s just a strategy to divert our attention away from the Cryptocurrencies they banned and now the launching has been postponed indefinitely. Maybe they’ve done their findings and discover Nigerians won’t buy the idea of e naira since it’s equivalent to our Fiat. Nigerians would rather trade normal Cryptos over e naira but we await the launching of the e naira.


A couple of questions for next panelists

  • How has the definition of CBDC’s changed?
  • What CBDC’s are likely first to be active?
  • Are there any correlation between tech used by other protocols ?
  • When will now be a good time? :slight_smile:
  • What coverage in media has been published on CBDC’s?
  • Would it accelerate a CDBD to start it from a more centralized environment?
  • What would a bottom up approach to a CBDC look like?

It is quite interesting that since this post, the eNaira has been launched and banks in Nigeria were ‘instructed’ to publicise its use and include it as a service. Nonetheless, in my opinion, the e-naira died a quick death due to lack of use and trust in it. It is also noteworthy that the technical infrastructure put in place also did not encourage its use. For instance, there are people who did not receive the e-token necessary to complete the registration process. Also, the populace who trade cryptocurrencies definitely do not want the government surveillance that comes with the use of the e-naira. It would take serious governance and structural changes to resurrect the e-naira in Nigeria.


I think these are really great and insightful questions @winum.
I would like to suggest a couple of questions;

  • Has any recently adopted CBDC made any meaningful contributions towards financial inclusion?
  • What are some challenges that have been faced by recently adopted CBDCs?
  • How can these challenges be mitigated?

@winum Thank you for raising so many great questions, they are definitely worthwhile to have further discussion.

@Tolulope You mentioned government surveillance, that’s an interesting issue, the importance of privacy of people can’t be overemphasized. It also reminds me of the third-party doctrine in the USA court’s practice, which allows the government to access records and materials that are delivered to third parties and out of the defendant’s control much easier. Some people have concern about the excessive power it provides to the government. However, it seems that CDBC leaves the movement no space.


From the discussion in the interview, I think the following;

  1. A CBDC should be designed with Blockchain and Cryptography as the core technology.
  2. Any CBCD designed outside the blockchain technology is not a CBCD and as such it is a normal Fintech software.

Therefore, how will validation and consensus mechanism of a CBDC operates. I need more light to this topic.

I’d like to believe that a blockchain is a very specific solution to the problem of forming consensus in the presence of untrustworthy third parties, but there would be no such parties in any Federal Reserve digital currency.

Using the Project Hamilton people for instance, it was noted that CBDC design choices are more granular than commonly assumed, and the “tokens or accounts” categorization is limited and insufficient to reveal the complexities of CBDC access, intermediation, institutional roles, and data retention. The distinction between the two is that an account-based system requires verifying the identity of the payer, whereas a token-based system requires verifying the validity of the object used to pay, as noted in various reports from the BIS, Bank of Canada, IMF, and others.

In reality, no central bank will allow a token-based system that operates anonymously, so digital identity will be essential to CBDC implementation.

This is why, even after the requirements, goals, and constraints of a national digital currency have been agreed upon, I believe it will take some time to work through all of these architectural choices. This broad range of design options does not strike me as a problem, but rather as an encouraging signal to policymakers and regulators.

@eleventh Thank you for bringing the summary of the CBDCS smart contract summit to the Forum. It’s a thought-provoking and engaging topic for discussion.