Algorand’s 2022 Report on Central Bank Digital Currency (CBDC) Recommends a Hybrid Approach to Increase Efficiency and Competitiveness in the Digital Economy

A team of leading economists and researchers highlights six considerations for central banks when evaluating the design and implementation of CBDCs.

BOSTON, July 12, 2022 /CNW/ — The Algorand research team publishes today “Central Bank Digital Currency Issuance Using Algorand“, a new report capturing insights from more than a year of continuous research into how CBDCs are performing in central banks around the world. The authors propose a hybrid CBDC model, built on a private instance of a blockchain such as Algorand, in a two-tier retail system In this model, central banks fully control the CBDC, while allowing licensed service providers (LSPs) such as commercial banks, money transfer providers funds and other fintech companies, to facilitate distribution and transactions. Overall, compared to a traditional centralized digital currency, the proposed design will be simpler and more cost-effective to implement and manage for large-scale central banks.

(PRNewsfoto/Algorand Inc.)

The report released today follows feedback from the team initial publication in 2021, with the notable addition of a new section that takes a close look at the benefits of CBDCs and the paramount role of central banks in the context of the broader digital age. According to the report, the four key trends defining the digital age include a growing digital economy, the tokenization of assets as a new business model, a growing demand for alternative forms of currency, and the emergence of decentralized finance as a new financial system. These trends directly call into question one of the essential tasks of a central bank: to ensure price stability. A private instance of a public blockchain, such as the model proposed in this report, can help central banks continue to fulfill their mandate in the digital age.

The report is co-authored by a team of eminent economists and researchers, including Andrea Civelli, Ph.D., senior economist at Algorand and professor of economics at Walton College of Business, specializing in monetary policy transmission and inflation modeling; Co-Pierre Georg, member of the Economic Advisory Board of the Algorand Foundation, Professor at the University of The capand Chair in Financial Stability Studies at the South African Reserve Bank; Naveed Ihsanullah, Engineering Research Manager at Algorand with a focus on distributed systems and over 20 years of experience in next-generation application security software; and Pierre GrassanoEuropean Business Solutions Director at Algorand, who previously spent more than 15 years at JP Morgan in senior management positions in several European countries.

Also included in the report:

  • The benefits of central bank digital currency: Highlights four key trends of the digital age and explains why they pose a challenge for central banks. Also motivates why central banks should issue CBDCs.

  • Designing an effective CBDC: Describes the design principles for effective central bank digital currencies that Algorand has identified through our various CBDC projects.

  • Economic considerations when issuing CBDCs: Discusses the economic implications when issuing a CBDC, from balance sheet and financial stability implications to monetary policy implications.

  • The Algorand Protocol: An overview of the Algorand protocol, including design principles and a high-level overview of the protocol itself.

  • Retail CBDC Issuance with Algorand: Algorand’s approach to issuing retail CBDCs, including a detailed overview of relevant design considerations and example use cases facilitated by the Algorand platform. In particular, we present the critical use cases for issuing CBDCs when connectivity is limited and the adjustable privacy requirements for low and high value transactions.

  • Wholesale CBDC Issuance with Algorand: Algorand’s design approach to wholesale CBDC and the most relevant use cases; additional use cases are detailed in Appendix A.

  • Conclusion: Final thoughts on why a hybrid CBDC model, built on a private instance of the open public blockchain Algorand in a two-tier retail system, is a unique approach from enterprises and other vendors.

To access the full report, visit

Algorand transforms business models and economies of all kinds. Founded by Turing Award-winning cryptographer Silvio Micali, Algorand’s high-performance Layer 1 blockchain is unparalleled in bringing fast, frictionless, and inclusive technologies to everyone. Algorand is reshaping every industry, from TradFi and DeFi to new creator economies and beyond. With an extraordinary commitment to interoperability and consistent delivery, our sustainable technology drives greater participation, transparency and efficiency for everyone. As the technology of choice for over 2000 global organizations, the Algorand ecosystem transforms the next generation of financial products, protocols and value exchange. For more information, visit



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