In the media

The manual is here: This is what the digital currency of the future should look like

By Peter Levring


07 July 2023

The central bank of central banks, the Bank for International Settlements (BIS), has published a report called "Project Polaris".

Read the article in Danish Børsen here.

This report is a step-by-step guide to how central banks such as Danmarks Nationalbank and Sveriges Riksbank must build security around the digital currencies of the future. A report prepared in collaboration with PA Consulting.

PA's Alexander McGill, risk management and financial crime expert, commented on the report in Børsen.

“There can be no doubt that for digital currencies to be implemented they must be secure and resilient. This is at the very heart of a currency, and digital versions are no different. For them to be adopted and effective there must be trust in their store of value.” says McGill.

Digital currencies today are cryptocurrencies that have little to do with CBDCs (Central Bank Digital Currency).

No one has built a CBDC yet, and users won't have the same trust in them that they have in physical money. Therefore, the new kind of central bank money becomes vulnerable while it is establishing itself as a reliable means of payment in parallel with the existing physical ones, according to McGill, who validated and quality-checked the report.

“Standard security frameworks used across the sector are not enough for central banks. Central banks must go beyond this when considering digital currencies and expect that they must provide protection against the most frightening threats – rogue states, global organised crime, state backed money laundering and hybrid warfare all present enormous threat to the success of digital currencies now,” says Alexander McGill.

He points out that a successful attack against a central bank digital currency will immediately undermine trust in all CBDCs, so central banks will be standing on each other's shoulders when they try their hand at digital currencies.

However, security is not everything. The report also assumes that all actors behave in roughly the same way with digital central bank money as they do with ordinary banknotes and coins.

“We anticipate that these security threats will evolve and do so quickly. Bad actors will continue to seek out ways to get around security controls, so it is critical that the digital currency security framework developed by central banks reflects this and stays ahead of these threats," says Alexander McGill.

Read more about the report here.

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