## ftnea2023007 — Introduction

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---

### Overview and purpose: the 5P methodology
- Presents a CBDC-specific project-management framework organized around five phases: Preparation, Proof-of-Concept (PoC), Prototype, Pilot, Production.
- Aims to:
  - establish a common terminology;
  - offer guidance to development teams on best practices for addressing CBDC-specific requirements and risks.
- Methodology characteristics:
  - iterative exploration with Go/No Go checkpoints;
  - not specific to any particular CBDC design;
  - delays costly or final technology/platform decisions until sufficient information is gathered;
  - complements the companion paper “How Should Central Banks Explore CBDC: A Dynamic Decision-Making Framework” (Soderberg and others 2023).

### Go/No Go decisioning and governance
- Four options at each phase intersection:
  - stay in the same phase and iterate;
  - move forward to the next phase;
  - move forward with some elements while staying in the same phase for unresolved questions;
  - pause or stop the project.
- Key governance features:
  - explicit checkpoints tied to evidence and pre-specified success criteria;
  - separation between the Development Team and the Policy Management Team to manage technical delivery and policy trade-offs;
  - decision criteria and participants should be agreed early and updated as findings emerge;
  - central banks should clearly communicate decisions and rationales to the public.
- Iterative management advantages:
  - rapid adaptation to new data compared with linear (Waterfall) processes;
  - incorporation of lessons via iterative reviews (analogous to “sprint retrospectives”).

### Phase-by-phase objectives and typical activities
- Phase 1 — Preparation
  - Organize team and clarify roles between development and policy management.
  - Conduct initial research, situational analysis, and stakeholder engagement planning.
  - Prepare high-level TOR and project plan structured around the 5P framework.
  - Typical activities: Design Thinking sessions; stakeholder focus groups, surveys, ethnographic studies; international peer engagement; review of white papers and consultation papers.
- Phase 2 — Proof-of-Concept (PoC)
  - Rapid, low-cost experiments (days or weeks) to validate or invalidate explicit assumptions.
  - Activities: small-scale technology experiments; mock-ups; hackathons; market consultations; surveys and Design Thinking workshops.
  - Emphasis on acquiring knowledge rather than selecting final technology or partners.
- Phase 3 — Prototype
  - Translate PoC results into refined working models; build internal capacity; select partners iteratively (e.g., open RFP).
  - Typical engineering and integration steps; culminates in a working “product” ready for low-risk testing.
- Phase 4 — Pilot
  - Deploy system in realistic testing environments with real users, data, and stakeholders.
  - Validate stakeholder interactions, data flows, resilience, maintenance, and user experience; simulate outages and attacks.
  - Optimize UX and operational procedures; inform “go live” decisions.
- Phase 5 — Production
  - Live operations: monitoring, cyber-resilience, incident response, recovery, maintenance, upgrades, and ongoing R&D coordinated with DevSecOps.

### Practical considerations emphasized for CBDC projects
- Interdependence of policy and technical requirements — both should evolve together and be tracked across the 5P map.
- Cost awareness across phases:
  - early phases emphasize low-cost experimentation;
  - later phases reveal operational and scale-related costs.
- Technology assessment:
  - explicit comparison of centralized databases versus DLT (permissioned/private) and hybrid options;
  - evaluation of centralized vs distributed functions, token vs account models, offline operations, interoperability, environmental impact.
- Risk management across phases:
  - cyber-resilience, incident response, operational continuity planning, privacy and compliance trade-offs.
- Numeric evidence and cost observations:
  - a 2022 IMF study showed central banks were employing 10 to 300 staff on CBDC work (Soderberg 2022).

### Tools, artifacts, and glossary
- Provides practical examples and illustrative activities for each phase to guide project teams.
- Recommends documenting TOR and project plans around the 5P framework and recording go/no go processes.
- Glossary abbreviations used:
  - CBDC — central bank digital currency
  - DevSecOps — developments, security, operations
  - DLT — distributed ledger technology
  - PoC — proof-of-concept
  - R&D — research and development
  - RFP — request for proposal
  - TOR — terms of reference

### Definition of assumptions and experimentation
- PoC purpose: validate assumptions identified during Preparation (examples include electricity/connectivity, offline technology maturity, privacy vs compliance, stakeholder risk understanding, interoperability feasibility).
- Use-case and user-journey examples (e.g., “Traveling to the Market in the City”) help uncover required collaborations (digital identity, transport companies).

---

### Country example — Morocco (Box 1)
- Governance and institutional setup:
  - Bank Al-Maghrib established a CBDC Committee in 2021 chaired by the director general; four Working Groups (role in payments; micro/macroeconomic study; legal/regulatory; technological and organizational R&D — the development team).
  - Three subgroups on financial integrity, design options, and stakeholder engagement.
- Research and knowledge sources:
  - IMF CBDC Handbook series; BIS Innovation Hub (2023); central bank papers; news aggregators.
  - Guidance: “falling in love with the problem, not the solution” (Levine 2023).
- Project management guidance:
  - develop high-level TOR and an initial project plan; regularly document and communicate progress; maintain a cohesive activity map.
- Phase 1 activities highlighted:
  - Design Thinking (system mapping, root-cause analysis, KPI setting);
  - stakeholder focus groups and ethnographic studies;
  - peer knowledge-sharing and national report reviews.

---

### Country example — Hong Kong Monetary Authority e-HKD (Box 4)
- Project overview:
  - e-HKD research began in 2021; published “e-HKD: A technical perspective” and subsequent 2022 responses; explored two-tiered distribution with privacy-preserving transaction traceability.
- DLT versus traditional technology — key considerations
  - Decision drivers: policy objectives, use cases, regulatory context, stakeholder readiness, risk assessment, technology-specific requirements (scalability, resilience, programmability).
  - Public DLT (as used by Bitcoin) is unsuitable for CBDC due to control, privacy, scalability, and finality concerns.
  - Permissioned/private DLT supports smart contracts and varying degrees of centralized control.
  - Properly designed centralized databases and DLT platforms can both provide enhanced resilience, governance options, and programmability.
  - Hybrid approaches are being investigated (some components traditional, others DLT-based).
- Table 5 — Top Five Relative Advantages (as presented)
  - Advantages of Centralized Databases:
    - Competencies more readily available for technology, security, and vendor relationship
    - Better control of privacy
    - Easier to scale
    - Easier to upgrade
    - Large available product base built on top
  - Advantages of DLT (if implemented properly):
    - More resilient by design if no single point of failure is introduced.
    - Offers new governance options
    - Central bank does not have to hold any private data
    - Could increase compatibility with DLT-based tokenized financial assets
    - Innovative domain, with new solutions emerging from decentralized finance
- Engaging with vendors and PoC risks:
  - PoC is not for final vendor selection; selection should be reserved for Prototype or later.
  - Mitigations: consult procurement officers; avoid expectations of guaranteed selection; keep technology choices flexible.
- PoC illustrative activities (Table 6 examples):
  - Design Thinking, stakeholder focus groups, mock-ups, risk scenario analysis, Lean Validation Board, small-scale tech PoCs, RfI/market consultations, workshops, hackathons, innovation challenges.

### Development methodologies and capacity building
- Prototype phase aligns with traditional IT development; methodologies overview:
  - 5P methodology — highly iterative.
  - Agile — adaptive iterative; useful in Preparation and PoC; consider for development and pilot despite procurement challenges.
  - Waterfall — linear; not generally suitable alone for CBDC projects; blending with Agile is advisable.
  - DevSecOps — integrates security across development and operations; important for production.
  - Test-driven development — automated tests before code; used in Prototype and Pilot.
- Roles and resourcing for Prototype:
  - Core CBDC team: project manager; technical architects; developers; cybersecurity specialists; business analysts; UX designers; QA analysts; data analysts; change management specialists.
  - Central bank team: policy experts; compliance/legal counsel; financial and monetary policy experts; payments experts; communications specialists.
  - External: technology vendors/partners; payment service providers; financial institutions; government agencies (especially ministries of finance).

---

### Prototype, Pilot, and Production — process, findings, and examples
- Prototype phase findings and trade-offs:
  - Choice between acquiring commercial solutions (time/resource savings but vendor lock-in risk) and building internally (control/customization but capacity gaps).
  - Hybrid approaches common: some components in-house; others via external providers.
  - Typical mitigation: identify a limited number of solution providers via RFP without locking future procurement.
- Development-phase process objectives:
  - iteratively select partners and build capacity to transition to Pilot;
  - evaluate partners against use cases, risks, and KPIs and eliminate unsuitable options over time.
- Pilot phase focus:
  - preproduction testing with real data/stakeholders; finalize capacity and onboarding; validate operational readiness and incident response; iterate per-iteration goals; deploy in dedicated test environments that replicate production.
  - UX optimization: trust, ease of use, accessibility, cultural fit; validate third-party UX; example—Uruguay’s e-Peso usability tests identified areas for improvement.
- Pilot metrics example — People’s Bank of China e-CNY (as of March 2023):
  - almost 20 million stores had accepted e-CNY payments;
  - users had made roughly 750 million e-CNY transactions;
  - total transaction value was about RMB 900 billion.
- Production phase key operational activities:
  - continuous monitoring and cyber-resilience (security audits, incident response);
  - incident response and recovery plans tested during Pilot;
  - maintenance, patches, upgrades, and ongoing R&D coordinated with DevSecOps teams.
- Costs and staffing:
  - evidence insufficient to generalize CBDC direct costs across countries;
  - expected major cost drivers: personnel and digital risks (cybersecurity, data protection, integrity/reliability);
  - example cost items by phase:
    - Preparation/PoC: small- to medium-size team, consultants, tech providers, workshops, hackathons, market research, conferences.
    - Prototype: core CBDC team, software development (internal/vendors), platform acquisition, licenses, network infrastructure, cybersecurity.
    - Pilot/Production: full-scale R&D team, data security, audits, compliance, training, systems monitoring/upgrades, user support, onboarding costs, vendor fees.

### Conclusion and utility of the methodology
- CBDC development remains evolving with limited established best practices.
- The 5P methodology:
  - offers structured yet flexible project management and shared terminology;
  - helps translate policy choices into experimentation and development activities;
  - supports a prudent, iterative approach to manage risks and align outcomes with central bank objectives.

---

### Annex highlights — country examples and reference model
- Phase 1 (Preparation) examples include ECB public consultation (2021); BOE consultation papers and expert groups; Bank of Thailand report; Denmark’s National Bank analysis; De Nederlandsche Bank survey study; Sweden’s Riksbank petition; HKMA “e-HKD: A Policy and Design Perspective”; Central Bank of Eswatini design paper.
- Phase 2 (PoC) examples include Central Bank of Brazil LIFT Innovation Challenge; MAS Global CBDC Challenge; BOJ PoC phases 1 and 2; Hong Kong e-HKD Pilot Programme (launched May 2023); Central Bank of Hungary Digital Student Safe Project.
- Phase 3 (Prototype) examples include Banque de France wholesale CBDC experiments; National Bank of Kazakhstan Digital Tenge Project 2021; ECB digital euro prototyping; Project Stella (ECB and BOJ); Project Dunbar (BIS Innovation Hub Singapore and four central banks).
- Phase 4 (Pilot) examples include PBoC e-CNY (launched late 2019; pilot expansion and functions); ECCB DCash (pilot 2021; expected go-live in 2023); Bank of Ghana e-Cedi; Central Bank of Uruguay e-Peso (pilot 2017–18); Project mBridge pilot involving $22 million PvP transactions.
- Phase 5 (Production) examples include Central Bank of the Bahamas Sand Dollar (launched October 2020); Central Bank of Nigeria eNaira (launched October 2021); Bank of Jamaica JAM-DEX (phased rollout started 2022).
- Annex II notes: reference model and technology layers highlight numerous technology components and providers central banks must consider in a CBDC ecosystem.

*International Monetary Fund — ftnea2023007 (Introduction)*

### Introduction ...........................................................................................................

### ftnea2023007 - Introduction

### Overview: The 5P Methodology and Structure
- Presents a project-management framework for CBDC development organized around the "Five Phases" (5P) methodology.
- Emphasizes iterative exploration, Go/No Go checkpoints, and alignment of policy, technology, and operational requirements across phases.
- Core phases identified: Preparation, Proof-of-Concept (PoC), Prototype, Pilot, Production.

### Go/No Go Decisioning and Governance
- Highlights the role of Go/No Go checkpoints to limit sunk-cost bias and enable staged decisions.
- Stresses separation of the Development Team and the Policy Management Team to manage technical delivery and policy trade-offs.
- Recommends explicit checkpoints tied to evidence and pre-specified success criteria at phase boundaries.

### Phase-by-phase objectives and typical activities
- Preparation Phase
  - Organizing the team and clarifying roles between development and policy management.
  - Conducting initial research and situational analysis.
  - Preparing project management arrangements and stakeholder engagement plans.
- Proof-of-Concept (PoC) Phase
  - Planning and executing low-cost activities to prove initial assumptions.
  - Experimenting to validate assumptions and clarify the cost structure of a CBDC.
  - Assessing technology options, including differences between DLT and traditional technology.
  - Engaging with technology providers and partners and implementing risk mitigation measures.
- Prototype Phase
  - Building internal capacity and clarifying the potential role of technology partners.
  - Translating PoC results into a more refined working model with typical engineering and integration steps.
- Pilot Phase
  - Deploying the system into a testing environment for real-world validation.
  - Validating stakeholder interactions, data flows, and resilience.
  - Optimizing user experience and operational procedures before large-scale deployment.
- Production Phase
  - Monitoring systems and ensuring cyber-resilience in live operations.
  - Providing incident response and recovery capabilities.
  - Performing maintenance and upgrades under production governance.

### Practical considerations emphasized for CBDC projects
- Interdependence of requirements and development—policy and technical requirements should evolve together and be tracked across the 5P map.
- Cost awareness across phases: early phases emphasize low-cost experimentation; later phases reveal operational and scale-related costs.
- Technology assessment includes explicit comparison of centralized databases versus DLT and guidance on engaging vendors and partners.
- Risk management across phases covers cyber-resilience, incident response, and operational continuity planning.

### Tools, artifacts, and exemplars referenced
- The document structures practical examples and illustrative activities for each phase to guide project teams.
- Country examples and modular reference content are used to illustrate governance models, stakeholder engagement, and technology choices.
- A concise glossary provides standard abbreviations used throughout the guidance:
  - CBDC — central bank digital currency
  - DevSecOps — developments, security, operations
  - DLT — distributed ledger technology
  - PoC — proof-of-concept
  - R&D — research and development
  - RFP — request for proposal
  - TOR — terms of reference

*International Monetary Fund — ftnea2023007 (Introduction)*

### Introduction

### ftnea2023007 - Introduction

### Overview: purpose and need for a CBDC-specific project methodology
- The progress of central bank digital currency (CBDC) projects around the world is increasing the need for an appropriate project management methodology, especially for the initial phases of research and development.
- A CBDC-specific project management methodology would:
  - establish a common terminology;
  - offer guidance to development teams on best practices for addressing the complex requirements and risks associated with CBDC.
- CBDCs have several specific characteristics: they are meant for the public, they are largely experimental, and their impact can be either beneficial or damaging—requiring careful experimentation and significant international and private sector coordination.
- The paper introduces the 5P methodology to help manage CBDC research, experimentation, development, and, when required, operation. The methodology:
  - is not specific to any particular type or design of CBDC;
  - uses CBDC in broad terms;
  - offers recommendations to help development teams address requirements and queries from the policy management team.
- The companion paper “How Should Central Banks Explore CBDC: A Dynamic Decision-Making Framework” (Soderberg and others 2023) covers policy management; together the two papers complement each other and are organized based on the 5P phases.

### I. The 5P Methodology — Overview of the Five Phases
- The 5P methodology consists of five phases: preparation, proof-of-concept, prototypes, pilots, and production.
- Rationale for an iterative and flexible approach:
  - CBDC projects are highly experimental and contain many unresolved questions;
  - iterative cycles within and across phases are necessary to understand and prove feasibility, benefits, risks, and implications at every step.
- Purpose of the 5P phases:
  - provide tools and techniques to manage technology exploration and research during phases 1 and 2;
  - facilitate coordination for development, testing, and potential production in phases 3, 4, and 5;
  - delay costly or final technology design/platform decisions until sufficient information is gathered.
- A tailored CBDC project management approach:
  - clarifies terminology across jurisdictions (e.g., pilots, prototypes, proof-of-concepts are often used interchangeably);
  - draws on project management principles from multiple industries and current CBDC experiences;
  - is not prescriptive or “one size fits all” — motivations, situations, and desired designs vary by country context.

### Table of the Five Phases — scope and sample questions
- Phases and Scope with examples of relevant questions:
  - 1: Preparation — Research trends, monitor evolution of technology, and implications.
    - What do emerging technologies and new solutions offer? How do they work? What architectures are emerging for CBDC, and what are the tradeoffs? What are the technology-related risks? What capacity would be needed in each phase? What would be the business and governance impacts?
  - 2: Proof-of-concepts — Lab test assumptions and key features of a CBDC.
    - What assumptions need to be validated or invalidated? How to test the various architectures and design elements? What technologies would support the requirements, and how do they work?
  - 3: Prototypes — Start to build CBDC and overall ecosystem.
    - How to integrate all the key elements of the architecture and the CBDC technology stack? What people, skills, processes are required to secure and support the CBDC platform?
  - 4: Pilots — Live test CBDC with actual use cases, data, and stakeholders.
    - Now that the CBDC system (or a portion) is assembled, does it work as expected in real conditions? How to test risk mitigation? What are the system’s maintenance requirements and what is the best way to meet them? Were the assumptions about adoption correct?
  - 5: Production — Launch and operate CBDC and ecosystem.
    - Are adoption and mitigating risks properly promoted? How to monitor, test, and implement innovative developments in the industry to benefit the CBDC? How to maintain operational stability and security?

### Go/No Go Checkpoints — governance for phase transitions
- At each phase intersection the central bank has four options:
  1. stay in the same phase and iterate to continue learning or building;
  2. move forward to the next phase;
  3. move forward with some elements that are ready but stay in the same phase for some other unresolved question;
  4. pause or stop the project.
- Key features of the go/no go process:
  - ensures authorities, team members, and stakeholders agree on progress, lessons learned, and next steps;
  - criteria for moving phases and decision participants should be agreed as early as feasible (ideally at project start) and regularly updated as new findings emerge;
  - includes identification and collection of relevant data, information, participants, and resources;
  - central banks should clearly communicate decisions and rationales to the public to avoid perceptions that stopping the project is a policy failure.
- Iterative project management advantages:
  - allows rapid adaptation to new data, inputs, or unanticipated events compared with linear (Waterfall) processes;
  - analogous to developers’ “sprint retrospectives,” where lessons are reviewed and incorporated into future iterations.
- Example outcome from an iteration:
  - a proof-of-concept iteration could reveal offline access technology is not mature; the decision group could either abandon the use case or iterate exploring alternatives such as SMS/USSD.

### Definition of Each Phase — detailed descriptions and decision outcomes
- Preparation phase:
  - crucial for laying groundwork and identifying key questions;
  - scope ranges from assessing specific technologies and risks to establishing rationale, policy goals, feasibility, benefits, drawbacks, risks, and success criteria;
  - involves initial assessment of capacity, feasibility, risks, motivation, and market conditions based on consumer behaviors, habits, and culture;
  - assumptions across domains (technical feasibility, regulatory compliance, acceptability, costs) must be explored in the next phase.
- Proof-of-concept (PoC) phase:
  - aims to validate or invalidate assumptions about CBDC and conditions for success (policy objectives, user motivations, technology options and maturity, legal/financial/technological questions);
  - proof of concepts can use low-cost activities beyond technology tests: surveys, Design Thinking workshops, interviews, hackathons, market consultations, innovation challenges, customized demonstrations;
  - after iterations, the central bank will decide to pause, continue research, or move on to developing CBDC elements.
- Prototype phase:
  - encompasses most of the development of the CBDC solution (for some use cases);
  - promotes development-through-prototypes to ensure continuous alignment with central bank objectives;
  - translates knowledge into requirements for development teams and engages solution providers (e.g., open RFP process);
  - involves selecting partners iteratively and building capacity in personnel, governance, regulation, and technology;
  - culminates in a working “product” ready for low-risk testing, with stakeholder and user representation; results inform decisions to pause, continue development, or proceed to pilot.
- Pilot phase:
  - quasi-production stage: final or near-final product developed for some use cases and tested in real life with stakeholders in low-risk environments;
  - assesses operational readiness: scalability, resilience, maintenance, risk management, user experience, adoption, user support;
  - aligns solution with policy objectives and studies adoption likelihood; develops marketing and communication strategy;
  - simulates events (outages, high usage) and allows iterative inclusion of new use cases, scenarios, or participants; positive pilot results support discussion to “go live” to production.
- Production phase:
  - start of ongoing management of the CBDC product;
  - operations, continuous development, and maintenance should ensure resilience, flexibility, and ongoing innovation;
  - a robust user support process should be in place and efficiency continuously monitored.

### II. How Development Teams Explore Technology and Develop CBDCs
- The Development Team and the Policy Management Team:
  - the development team can originate from various central bank departments (IT unit, payments or banking operations, higher-level CBDC initiative entity);
  - referred to here as the “development team,” with the team lead or project manager coordinating R&D across phases;
  - the project manager and team composition change throughout the project life cycle.
  - the development team collaborates closely with the policy management team, which oversees objectives, policies, and risks related to the CBDC project.
  - the CBDC management team poses questions and provides requirements to guide development.
  - both teams collaborate to navigate the 5P phases to progressively minimize uncertainties, risks, and options while enhancing capacity to develop a CBDC solution aligned with central bank objectives.

### Preparation Phase — organizing the team and early resourcing guidance
- Typical starting conditions:
  - many CBDC projects begin with a limited number of fully dedicated staff (if any).
- Project manager responsibilities:
  - identify key functions and competencies required for R&D;
  - secure availability of existing internal resources for specific phases/iterations;
  - when competency gaps exist, plan to hire, develop internally, or collaborate with external partners.
- Resourcing guidance:
  - during initial iterations of the preparation phase, project managers should focus primarily on identifying requirements;
  - avoid prematurely building capacity without sufficient support or evidence due to associated risks.

*Source: ftnea2023007 - Introduction*

### Box 1. Country Example—Morocco

### Box 1. Country Example—Morocco

### Governance and institutional setup
- Bank Al-Maghrib established a CBDC Committee in 2021, comprising representatives from relevant internal entities and chaired by the central bank’s director general.
- The committee is responsible for examining issues related to CBDC and other digital assets and oversees four Working Groups:
  - Working Group 1 explores the potential role of a CBDC in the national payment landscape.
  - Working Group 2 focuses on the micro- and macroeconomic study and analysis of the contributions, impacts, and risks.
  - Working Group 3 addresses the legal and regulatory framework.
  - Working Group 4 oversees the technological and organizational aspects and conducts R&D. In this paper, such a group is referred to as “the development team.”
- In addition, three subgroups are responsible for topics related to financial integrity, design options, and stakeholder engagement.
- Source: Conversations with country authorities.

### Conducting initial research
- Development teams typically conduct comprehensive research on lessons learned from other institutions and central banks during the preparation phase.
- Sources of knowledge cited include:
  - the IMF’s CBDC Handbook series,
  - the work of the Bank for International Settlements Innovation Hub (2023),
  - papers released by central banks.
- News aggregator websites such as https://kiffmeister.com/ or https://www.finextra.com/latest-news?keyword=cbdc monitor key publications on CBDC.9
- Thorough research significantly informs the subsequent hands-on activities carried out during the proof-of-concept phase.
- Guidance: “falling in love with the problem, not the solution” (Levine 2023) — broaden scope beyond CBDC solutions to examine non-CBDC options and identify stakeholders, partners, and conditional dependencies (for example, fast payment systems or digital identity).

### Preparing to manage the project
- Develop a high-level terms of reference (TOR) document and an initial project plan to communicate and align objectives, scope, deliverables, timeline, and roles and responsibilities.
- Structure TOR and project plans around the 5P framework; include initial thoughts about the go/no go decision process between phases.
- Regularly document project work in the TOR and communicate progress to the policy management team to maintain alignment and transparency.
- Project managers must maintain a cohesive plan and comprehensive map of key activities to track progress and facilitate clear communication with the policy management team (Figure 4).

### Examples of activities useful in Phase 1 (Preparation)
- Design Thinking sessions (see Lewrick and others 2020):
  - system mapping, root-cause analysis, abstraction laddering, envisioning success, setting preliminary key performance indicators and road maps.
- Stakeholder focus groups, surveys, ethnographic studies and interviews:
  - identify user types, behavioral patterns, motivations, gaps, capabilities, and habits.
- International experience:
  - research other countries’ experience, engage with peer central banks, hold bilateral knowledge-sharing sessions.
- National information:
  - research existing reports, analysis, and data on jurisdictional topics (financial inclusion context, market competition, market structures).
- White papers, consultation papers, and other reports:
  - central bank white papers documenting goals and how CBDC could achieve them.

### Proof-of-Concept (PoC) phase: purpose and practice
- Definition: “concept” refers to a particular question or inquiry related to the CBDC solution that requires experimentation to gain a deeper understanding of the role of technology or other elements.
- Objectives:
  - organize assessment and understanding of key questions related to CBDC solutions with rapid, low-cost activities.
  - acquire knowledge rather than select components of the final solution.
- Characteristics:
  - A PoC typically takes days or weeks, not months, to organize and execute.11
  - Scope should be tightly targeted; iterate several PoCs to inform later stages (prototype, pilot).
- Examples and approaches:
  - small-scale technology experiments to gauge maturity (Bank of Japan PoCs since 2020; Bank of Israel PoC).
  - customized demonstrations by solution providers.
  - engaging with technology actors via hackathons or innovation challenges.
- Emphasis: PoCs should encompass a broader approach beyond lab testing to include experiments validating use cases, market value, and consumer reactions.

### Proving initial assumptions
- Key objective: validate initial assumptions (explicit or implicit) identified during the preparation phase.
- Practice: explicitly identify assumptions and design activities to validate or invalidate them continuously throughout the project lifecycle.
- Examples of assumptions that may require experimentation (Table 3):
  - Electricity, connectivity, affordability, phone capacity, and so on will not be a problem for the use cases in scope.
  - Offline technologies can provide safe payment and are easy to use.
  - Privacy and compliance can be preserved simultaneously.
  - Stakeholders understand and can properly manage the risks such as those related to cyberattacks, fraud, of identity theft.
  - Interoperability with existing payment systems is feasible and does not affect scalability.
- Use-case example: “Traveling to the Market in the City” — examine the user journey to uncover assumptions and success factors related to people, processes, technology, and stakeholder readiness; may reveal needs to collaborate with national digital identity agencies or transport companies.

### Stakeholder engagement examples
- Central Bank of Brazil, LIFT Innovation Challenge:
  - involved private-sector entities to develop minimum viable products for proposed use cases (offline payments; trading of real estate and digital financial assets; rural financing based on programmable money; decentralized finance for small business; e-commerce parcel delivery solution).
- Central Bank of Peru:
  - used the 5P methodology, conducted a market consultation via a questionnaire in March 2023 following a white paper; held a two-day Design Thinking workshop with stakeholders and the IMF to identify adoption conditions (role of central bank enabling business models, involvement of broader participants, regional differences, role of digital identity).

### Understanding cost structure
- Current evidence is insufficient to determine the direct cost of developing and implementing a CBDC in a specific country due to limited live implementations and diverse approaches.
- Observation: a 2022 IMF study showed central banks were employing 10 to 300 staff on CBDC work (Soderberg 2022).
- Expected major cost drivers: managing personnel and digital risks (cybersecurity, data protection, integrity and reliability of the CBDC system).
- Teams may investigate potential cost savings from reducing production, management, use, and security costs of cash; evidence remains insufficient for a general formula.
- Examples of cost items by phase (Table 4):
  - Preparation and Proof-of-Concept Phases:
    - Small- to medium-size team, consultants, technology providers, workshops, hackathons, market research, conferences.
  - Prototype Phase:
    - Core CBDC team (including information technology, payment, banking, supervision, legal), software development (internal and vendors), platform acquisition, licenses, network infrastructure setup, cybersecurity.
  - Pilot and Production Phase:
    - Full-scale research and development team, data security, security audits, testing, compliance assessment, training, ongoing maintenance and operation (systems monitoring, upgrades), user support, customer services, onboarding cost of new users and participants, ongoing fees for vendor involvement.

### Understanding architecture and assessing technology options
- Project managers and development teams should explore and evaluate different architectural options given policy objectives and nontechnical requirements identified during preparation.
- Architectural considerations include:
  - centralized versus distributed functions;
  - token-based, account-based, and bearer instrument approaches;
  - offline operations;
  - interoperability design options;
  - environmental impact of different architectures.
- PoC assessments should include technical feasibility checks for scalability, security, privacy, interoperability, and performance (for example, simulate different load conditions to assess scalability against relevant peak transaction volumes).
- Findings may evolve as projects add features, integration points, or data; continuous evaluation and iteration are necessary.

*Source: ftnea2023007 - Box 1. Country Example—Morocco*

### Box 4. Country Example—Hong Kong Monetary Authority e-HKD

### Box 4. Country Example—Hong Kong Monetary Authority e-HKD

### Project overview
- In 2021, the Hong Kong Monetary Authority began project e-HKD to research the feasibility, benefits, and risks of a potential Hong Kong dollar retail CBDC.
- The Authority conducted initial technology research and published the report “e-HKD: A technical perspective.”
- The work explored technology requirements, options, and feasibility for the Hong Kong dollar, including technologies to enable two-tiered distribution of retail CBDC with privacy-preserving transaction traceability.
- The Hong Kong Monetary Authority published responses to this report in a 2022 publication.

### DLT versus traditional technology — key considerations and findings
- Project managers deciding between a private, permissioned distributed ledger technology (DLT) and traditional database architecture should consider:
  - policy objectives
  - use cases
  - regulatory context
  - stakeholders' readiness
  - risk assessment
  - technology-specific requirements such as scalability, resilience, or programmability
- The choice of technology and technology partners should align with these considerations; PoCs will provide important knowledge to assess pros and cons.
- A public version of DLT (as used by Bitcoin and other cryptocurrencies) is not suitable for a CBDC because of concerns about control, privacy, scalability, and finality.
- Central banks are exploring technology features that DLT offers in the context of a permissioned, private version controlled entirely by the operator.
- DLT technology natively supports distributed programs called smart contracts and can allow varying degrees of centralized control by the central bank.
- Both centralized databases and DLT-based platforms, if properly designed, can provide:
  - enhanced resilience
  - alternative governance structures
  - programmability through transparent software code
- Traditional, centralized database environments (non-DLT solutions):
  - typically already have robust security measures in place
  - most central banks have significant internal competencies to tackle issues such as scalability or access control
  - may place a heavier burden on the central bank as the administering authority
- If a permissioned, private DLT-based platform is chosen, the central bank must determine access to the ledger and the respective roles of the parties involved.
- Some central banks are investigating a hybrid approach, whereby some parts of the system leverage traditional technologies, while the distribution is performed with a DLT system.
- There is no generic answer regarding the optimal choice; each central bank should consider technology relevance to their environment and appetite to explore innovative technologies.
- Table 5 presents considerations that can influence the attractiveness of one technology over another.

### Table 5 — Top Five Relative Advantages (as presented)
- Advantages of Centralized Databases:
  - Competencies more readily available for technology, security, and vendor relationship
  - Better control of privacy
  - Easier to scale
  - Easier to upgrade
  - Large available product base built on top
- Advantages of DLT (if implemented properly):
  - More resilient by design if no single point of failure is introduced.
  - Offers new governance options
  - Central bank does not have to hold any private data
  - Could increase compatibility with DLT-based tokenized financial assets
  - Innovative domain, with new solutions emerging from decentralized finance

### Engaging with technology providers and partners — guidance and risks
- Central banks must have technology expertise to complement the expertise of technology vendors to reduce operational risks.
- The PoC phase consists of rapid, low-cost tests and is not intended for selecting a final technology solution or long-term technology partner; selection responsibility should be reserved for the subsequent prototype phase or later.
- Risks to manage during PoC collaboration:
  - Avoid creating the expectation that the PoC partnership guarantees that the technology partner will be selected for the subsequent prototype phase.
  - Consult with the central bank’s procurement officers to prevent situations where a partner involved in the PoC might receive preferential treatment or an unfair advantage that may render them ineligible for a future bidding process.
  - Ensure technology choices remain flexible until final CBDC designs are determined; the technology used in PoC (or prototype or pilot) should not be locked in.
- Manage these risks by clearly separating PoC goals (developing in-house knowledge, identifying options, conducting initial feasibility tests) from prototype goals (progressively developing a CBDC solution through a series of prototypes).

### Mitigating technology-related risks
- The development team should test approaches, processes, technology, design choices, and other elements to mitigate technology-related risks identified during the preparation phase.
- The PoC phase aids understanding of steps to protect against cyberattacks and the capabilities needed to mitigate, protect privacy, and manage operational risks (references: Agur and others 2023; Amazon Web Services 2021).
- This topic will be further developed in an upcoming IMF paper (see also Fanti and others 2022).

### Illustrative activities for the PoC phase (Table 6 examples)
- Key characteristics: facilitate collaboration with stakeholders, low cost, relatively short timeline (typically less than a few months).
- Exploring concepts, assumptions, and conditions of success with representatives of users and central bank functions:
  - Design Thinking sessions — assumption mapping and prioritization; develop design principles and draft user experience concepts.
  - Stakeholders focus groups, surveys, ethnographic studies — validate assumptions on value proposition, consumption patterns, use cases, pain points, privacy, trust, security; use behavioral models such as COM-B.
  - Mock-ups (low-fidelity simulation of products) — simulate user interaction with the future product.
- Exploring concepts, assumptions, and conditions of success with stakeholders:
  - Risk scenario analysis (ISACA 2009) — identify risks and potential mitigation solutions.
  - Lean Validation Board (Cooper, Vlaskovits, and Ries 2016) — identify solution hypotheses and determine core assumptions.
- Exploring concepts, assumptions, and conditions of success with solution providers:
  - Small-scale technology proof-of-concept — test specific questions (digital wallet, offline payment, scalability, privacy, exchange of data among service providers, smart contracts).
  - Request for information, market consultation — identify vendors’ capabilities and suggestions.
  - Workshops and demos — assess technology potential and stakeholders’ readiness.
  - Hackathons, design jams, design sprints — discover market ideas, possible vendors, innovation potential; develop relationships with the innovation ecosystem.
  - Innovation challenge, incubator program, accelerator program — expose specific questions to industry to discover approaches; deliverables range from mock-ups to demos; contrast with technology PoC which tends to focus on one aspect of a solution.

### Prototype phase and development methodologies
- The prototype phase starts once concepts are understood, assumptions and success criteria established, and the decision to move forward is taken.
- Focus: developing the CBDC ecosystem or constituent elements while building operational capabilities.
- Central banks are not yet committed to issuing a CBDC during this stage.
- Prototype phase aligns with traditional IT development; central banks can draw on their experience and industry best practices.
- Development methodologies overview (Box 5):
  - 5P methodology: five phases, highly iterative to promote rapid learning and progressive capacity building.
  - Agile: adaptive iterative approach; useful for preparation and PoC phases; consider for development and pilot phases despite potential procurement challenges (Beck and others 2001).
  - Waterfall: traditional linear methodology; requires high certainty early on, typically not available in CBDC projects; blending Waterfall with Agile best practices is advisable for prototype, pilot, and production phases.
  - DevSecOps: integrates security into the entire software development process; important during the production phase to continuously improve security and deliver updates efficiently (Wilson 2020).
  - Test-driven development: write automated tests before code; typically used during the prototype phase and fine-tuned during the pilot phase (Beck 2002).

### Building internal capacity — roles and resourcing
- The prototype phase requires increasing resources including personnel, change management, governance, and technology to support CBDC solution development.
- Project managers should identify key roles and their level of involvement:
  - Core team (within the CBDC development team): project manager; technical architects; developers to code key functions including via smart contracts; cybersecurity specialists; business analysts; user experience designers; quality assurance analysts; data analysts; change management specialists.
  - Team within the central bank: policy experts; compliance officers and legal counsel; financial analysts, monetary policy experts; payment system experts; communications specialists.
  - Team outside the central bank: technology vendors and partners; payment service providers; financial institutions participating in testing and integration; government agencies, in particular ministries of finance.

*Source: Box 4. Country Example—Hong Kong Monetary Authority e-HKD (extracted from the provided PDF content).*

### 2021. The prototype explored the feasibility, challenges,  and opportunities of a basic retail CBDC distributed

### ftnea2023007 - 2021. The prototype explored the feasibility, challenges,  and opportunities of a basic retail CBDC distributed through commercial banks. It tested opportunities for key life cycle scenarios: issuance, distribution, purchase, and transfers. In 2022, the central bank continued research with a decision-making framework report,  and it tested a more sophisticated platform with limited users and merchants.

### Prototype and early development findings
- The prototype explored feasibility, challenges, and opportunities of a basic retail CBDC distributed through commercial banks, testing issuance, distribution, purchase, and transfers.
- In 2022, research continued with a decision-making framework report and testing of a more sophisticated platform with limited users and merchants.
- Central banks face a choice between acquiring commercial solutions from external vendors and developing solutions internally.
  - Acquiring external solutions:
    - Can save time and resources.
    - Exposes central banks to potential vendor lock-in and reduced long-term flexibility.
    - Smaller countries with limited capacities should be cautious of turnkey promises that may not meet specific needs.
  - Building internally:
    - Offers greater control and customization.
    - Central banks often lack specialized expertise for large-scale technology projects, especially retail products.
- A CBDC project encompasses multiple technology components; some components (e.g., cybersecurity measures or cloud vendors) may already be owned by the central bank.
- Central banks may choose a hybrid approach: develop certain elements in house while collaborating with external solution providers for other components.
- During early prototyping, central banks typically cannot select a final solution or partners; one mitigation is to identify a limited number of solution providers through an RFP.
  - Footnote: 15 A request for proposal (RFP) is a business document that describes the project and solicits bids from qualified contractors for prototypes for well-documented use cases.

### 5P methodology and development-phase process
- The development phase follows the iterative approach of the 5P methodology to gradually select partners and develop solutions for targeted use cases.
- Objectives of development phase:
  - Gain deeper understanding of associated risks, necessary resources, and required capabilities to transition to the pilot phase.
  - Iteratively build capacity, knowledge, and operational readiness to enable a pilot with real users if the decision is to move forward.
- Typical steps and considerations:
  - Prototype phase typically starts with selection of several potential technology and implementation partners and gradually eliminates the least appropriate ones.
  - Relevance of each partner should be evaluated against previously identified use cases, risks, and key performance indicators.
  - Central banks should work with all relevant and available stakeholders to build readiness; if key stakeholders cannot participate, mitigate by avoiding use cases that rely heavily on them or identifying alternatives (footnote 16).
  - The development phase and subsequent phases use familiar project management practices for large, mission-critical projects.
  - Box 5 and Figure 6 (referenced) describe popular development methodologies and prototyping steps.

### Pilot phase: definition, objectives, and testing
- Definition (per 5P methodology): the pilot phase is the preproduction stage when the CBDC solution has been chosen, is largely implemented, and undergoes testing with real data and actual stakeholders.
- Focus during pilot:
  - Finalize necessary capacity.
  - Onboard stakeholders.
  - Test all aspects of the CBDC solution.
  - Provide quality assurance.
- Piloting is done through iterative steps; each iteration:
  - Sets specific goals.
  - Checks readiness of all stakeholders, including the central bank.
  - Tests operational readiness for specific use cases (e.g., a CBDC wallet for public transport).
- Deploying to a test environment:
  - The selected solution is deployed in a dedicated test environment replicating production characteristics.
  - Multiple iterations validate performance, functionality, and compatibility with existing financial infrastructure.
- Validation through real-world testing:
  - Conduct comprehensive testing with real-world stakeholders, real data, and simulated negative events.
  - Realistic data simulate usage scenarios and transaction volumes to assess scalability, throughput, and response time.
  - Simulate risk events (e.g., cyberattacks, system outages); tests should be practical (e.g., sever the connection to the ledger) to validate incident response and business continuity plans.
  - Identified issues or weaknesses must be addressed before production.
- Optimizing user experience:
  - User experience encompasses trust, ease of use, security, accessibility, cultural considerations, and support availability.
  - Development teams engage in iterative observation and feedback collection to evaluate user-friendliness, intuitiveness, security, and accessibility (including individuals with disabilities or low literacy).
  - Poor user experience can negatively affect adoption; validation of third-party–developed UX is required.
  - Box 7: Uruguay’s e-Peso—Central Bank of Uruguay optimized usability through usability tests and user feedback; identified areas for improvement included communication and availability on all mobile devices.
  - UX should reflect design principles from Design Thinking and behavioral studies and address value proposition, habits, and cultural aspects to increase desirability, trust, and likelihood of adoption.
  - Testing in the pilot phase validates the entire design approach and allows for changes if concepts are not well tested.

### Country examples and pilot metrics (People’s Bank of China e-CNY)
- People's Bank of China timeline and milestones:
  - Began researching digital fiat currency in 2014.
  - Established Digital Currency Institute in 2016; developed first-generation prototype in 2016.
  - Began private-sector collaboration in 2017.
  - Launched e-CNY pilot in late 2019.
  - e-CNY was made available to foreign visitors within venues of the 2022 Winter Olympics in Beijing.
- Pilot monitoring and expansion:
  - The PBoC continues to expand test scenarios and applications in pilot regions and analyze e-CNY implications for monetary policy, financial markets, and financial stability.
  - As of March 2023:
    - Almost 20 million stores had accepted e-CNY payments.
    - Users had made roughly 750 million e-CNY transactions.
    - Total transaction value was about RMB 900 billion.
- Note: The e-CNY is developed by the People’s Bank of China.

### Production phase: operations, resilience, and ongoing evolution
- If officially launched, the project team establishes critical operational functions and adopts best practices used in large-scale, high-risk projects.
- Key operational activities:
  - Monitoring systems and ensuring cyber-resilience:
    - Continuous monitoring to detect and mitigate cyberthreats and security breaches.
    - Implement robust security measures, regular security audits, and prompt incident responses.
    - Protect system integrity and data confidentiality.
    - Topic to be covered in a forthcoming IMF CBDC Handbook.
  - Incident response and recovery:
    - Initiate effective incident response plans tested during the pilot.
    - Coordinate with stakeholders to investigate incidents and recover rapidly with minimal impact.
  - Maintenance and upgrades:
    - Perform regular maintenance, apply software patches and updates, and address technical issues and performance bottlenecks.
    - Assess emerging technologies and market trends for system upgrades and enhancements.
    - Assemble a dedicated R&D team to keep the CBDC at the technological frontier.
    - Coordinate this work with a DevSecOps team (Box 5 referenced).
- Ongoing efforts by CBDC teams are vital for continued success, user satisfaction, and resilience.

### Conclusion and methodology utility
- CBDC development is evolving; best practices are not yet fully established.
- CBDCs require a systematic approach to research, development, and implementation.
- This paper is a companion to the IMF Fintech Note "How Should Central Banks Explore CBDC: A Dynamic Decision-Making Framework" and focuses on helping project managers translate policy choices into experimentation and development activities.
- The 5P methodology:
  - Provides shared terminology and a coordinated approach for managing CBDC projects from research and development to implementation.
  - Offers a structured yet flexible framework that can accommodate varying country contexts.
  - Aids central banks in managing inherent risks and ensuring achievement of intended objectives.
  - Supports a prudent and iterative approach as key to future CBDC success.

*Content derived from ftnea2023007 (Fintech Notes – Thinking Like a CBDC Project Manager).*

### Annex Table 1.1. Country Examples

### Annex Table 1.1. Country Examples

### Phase 1: Preparation
- European Central Bank (ECB)
  - 2021 Public Consultation
  - As one component of its investigation phase for a digital euro, the ECB’s public consultation gathered valuable data about the interests of end users regarding CBDC design and development plans. Since this report, the ECB has continued its outreach to external stakeholders and consultations with various Eurosystem committees.
- Bank of England (BOE)
  - Consultation Paper and Technology Working Paper
  - As part of its research and exploration effort for the digital pound, the BOE first published a discussion paper on CBDC in March 2020, inviting feedback on its “platform model.” In February 2023, it released a follow-up consultation paper and technology working paper describing its research and priorities in detail and inviting feedback on the policy and technology aspects of a potential digital pound. The paper was coauthored with His Majesty's Treasury.
  - External Expert Groups
  - The BOE also convenes two ongoing expert groups to provide input and industry insight to its CBDC research. The CBDC Technology Forum provides insight on technology issues while the CBDC Engagement Forum provides insight on policy issues.
- Bank of Thailand
  - “The Way Forward for Retail Central Bank Digital Currency in Thailand”
  - The report explores the use cases, value proposition including cost-benefit analysis, and key considerations of a potential retail CBDC in Thailand. The findings helped inform the central bank’s approach toward retail CBDC.
- Denmark’s National bank
  - Analysis report: “Central Bank Digital Currency in Denmark?”
  - The report investigates the value proposition and use cases of retail CBDC in Denmark, concluding that the benefits do not outweigh the risks and challenges it presents.
- De Nederlandsche Bank
  - “What Triggers Consumer Adoption of CBDC?”
  - The report describes survey research investigating individuals’ preferences for the potential use of retail CBDC in the Netherlands. The survey data are used to inform the prospects and design for CBDC in the country.
- Sweden’s Riksbank
  - “Petition to the Riksdag: The State’s Role on the Payment Market”
  - The document describes a petition from Sweden’s central bank to its legislature to review critical issues pertinent before potential CBDC development, including the concept of legal tender and the role of the state in payments.
- Hong Kong Monetary Authority
  - “e-HKD: A Policy and Design Perspective”
  - The paper describes key policy issues for an e-HKD retail CBDC in Hong Kong, highlighting both opportunities and challenges. It also explores issuance mechanisms, interoperability with other payment systems, privacy and data protection, and legal considerations.
- Central Bank of Eswatini
  - Initial Digital Lilangeni Design Paper
  - The report describes the design characteristics of a potential retail CBDC in Eswatini. The central bank began initial exploration in 2021; in addition to this report, the preparatory phase included a November 2022 stakeholder forum. The central bank is now beginning technical experimentations.

### Phase 2: Proof-of-Concepts
- Central Bank of Brazil
  - LIFT Innovation Challenge
  - The challenge seeks to promote and identify opportunities related to CBDC use cases and technical feasibility for a potential CBDC issued in Brazil. Participants develop and present minimum viable products to the central bank and public. The focus is on exploring new business models and use case ideas for CBDC.
- Monetary Authority of Singapore (MAS)
  - Global CBDC Challenge
  - The technology-focused challenge was intended to help the MAS identify technical possibilities and challenges related to retail CBDC intended to increase payment efficiency and support financial inclusion and digitalization. Participants presented proof-of-concepts to a panel of judges.
- Bank of Japan (BOJ)
  - Proof-of-concept phases 1 and 2
  - The BOJ’s phase 1 experiment tested the feasibility of “CBDC ledger” design alternatives for performing basic operations of a CBDC life cycle and the technology challenges and trade-offs involved. The phase 2 experiment studied the technical feasibility of additional basic functions, such as holding and transaction limits, interest paid on holdings, scheduled and batched remittances, and connections with external systems. The BOJ is commencing what it calls a “pilot phase” in 2023 now that PoCs are complete.
- Hong Kong Monetary Authority
  - e-HKD Pilot Programme
  - Launched in May 2023, the e-HKD Pilot Programme hosts 12 private-sector finance and technology firms to develop use cases in six categories that could apply to CBDC in the future: full-fledged payments, programmable payments, settlement of tokenized assets, offline payments, tokenized deposits, and settlement of web3 transactions. The projects will add to knowledge about opportunities, implementation, and design issues of a potential e-HKD.
  - e-HKD technical white paper
  - While a technical experiment was not involved, the 2021 e-HKD technical white paper explored technology architectures and options for a Hong Kong dollar retail CBDC. For instance, it studied solutions that would enable two-tiered distribution systems for retail CBDC with privacy-preserving transaction traceability. The work builds on past studies by other central banks, the private sector, and Project Aurum with the HKMA, BIS Innovation Hub Hong Kong Centre, and the Hong Kong Applied Science and Technology Research Institute.
- Central Bank of Hungary (MNB)
  - CBDC—an opportunity to support digital financial inclusion: Digital Student Safe in Hungary
  - MNB launched a retail CBDC project with a special focus on financial inclusion and education (“Digital Student Safe Project”). In this project, adults and children can register, the latter with parental approval. A dedicated mobile application can be downloaded by any citizen. The legal form of the CBDC is electronic money issued by the central bank of Hungary; the registered users have a direct claim on central bank liability. MNB is operating and managing all the e-money accounts. Users can top up their balance digitally from their commercial bank accounts, and they can also transfer their balance to any Hungarian bank accounts.

### Phase 3: Prototype
- Banque de France
  - Experimentation with wholesale CBDC
  - The French central bank conducted a set of experiments exploring how multiple aspects of wholesale CBDC technical infrastructure can be feasibly implemented; they also looked into the associated possibilities and trade-offs.
- National Bank of Kazakhstan (NBK)
  - Digital Tenge Project 2021 tests
  - After initial preparatory research for a Digital Tenge, the NBK developed a prototype platform in 2021 that explored the feasibility, challenges, and opportunities of retail CBDC distributed through commercial banks. It tested opportunities for key life cycle scenarios: issuance, distribution, purchase, and transfers. In 2022, the NBK continued research with a decision-making framework report, and it tested a more sophisticated technical platform.
- ECB
  - Digital euro prototyping
  - To inform its investigation into a digital euro, the ECB conducted technical prototyping of various use cases and design possibilities from 2022 to 2023. The outcomes inform how CBDC could be technically implemented and integrated within the European payments landscape. It experimented with a back-end settlement engine and user interfaces for e-commerce and Peer to Peer (P2P) online and offline payments.
- ECB and Bank of Japan
  - Project Stella Phase 4
  - Project Stella consists of four phases of technical experimentation for a distributed ledger technology (DLT)-based CBDC that occurred from 2016 to 2020. As an example, Phase 4 explores how confidentiality (through privacy-enhancing techniques) and auditability can be achieved in a DLT environment.
- BIS Innovation Hub Singapore and four central banks
  - Project Dunbar
  - Project Dunbar developed prototypes using DLT to test a multi-CBDC platform. It identified challenges related to access, governance, and regulations, and it proposed design approaches to address the challenges. It then demonstrated technical feasibility of those design approaches.

### Phase 4: Pilot
- Digital Currency Institute of the People’s Bank of China
  - e-CNY
  - The e-CNY was launched in late 2019 as the world’s first CBDC pilot by a major economy. The pilot is currently open to specific regions and was made available to foreign visitors within the venues of the 2022 Winter Olympics in Beijing. The pilot regions have since been gradually enlarged, and more products and functions have been developed such as out-of-power payment, smart contracts, and accessibility payments.
- Eastern Caribbean Central Bank (ECCB)
  - DCash
  - The ECCB launched its pilot retail CBDC in 2021 and has gradually widened availability to all eight member countries of the monetary union. The central bank continues to expand functionalities as it studies the successes and challenges of the implementation to inform the final deployment, which is expected to go live in 2023.
- Bank of Ghana
  - e-Cedi
  - The e-Cedi is a pilot retail CBDC in Ghana. It is available in limited regions to test its capabilities and design for offering a secure and robust payment infrastructure that enables financial inclusion. Key aspects of the pilot include testing offline functionality and assessing user and merchant interest and adoption.
- Central Bank of Uruguay
  - e-Peso
  - The e-Peso retail CBDC pilot ran in Uruguay in 2017–18. After the pilot’s close, the central bank evaluated the results. It is not clear whether experimentation will restart.
- Bank for International Settlements Innovation Hub Hong Kong Centre, the Hong Kong Monetary Authority, the Bank of Thailand, the People’s Bank of China, and the Central Bank of the United Arab Emirates
  - Project mBridge
  - Project mBridge began as a prototype of multicurrency CBDCs that demonstrated the potential of using wholesale CBDC and DLT for delivering real-time, cheap, and safe cross-border payments and settlements. In 2022, a pilot was conducted involving $22 million of payment and foreign exchange Payment vs. Payment (PvP) transactions with 20 commercial banks transacting on behalf of corporate clients.
- Reserve Bank of India
  - Digital Rupee
  - The Digital Rupee retail CBDC pilot was launched in December 2022 in four Indian cities and with four commercial banks who distribute the CBDC. Additional cities and commercial banks are being added in phases. The pilot intends to test functionalities of the CBDC with the given architecture and technology design, from creation to usage in real time. Knowledge gained will inform future pilots that will test additional features and applications. Users can transact with individuals and merchants using digital wallets, offered by the participating banks, on their mobile phones.

### Phase 5: Production
- Central Bank of the Bahamas
  - Sand Dollar
  - The Sand Dollar was launched in October 2020. It aims to support domestic payment efficiency, improve financial inclusion, and strengthen defense against illicit payment activity. It is issued by the central bank through authorized financial institutions.
- Central Bank of Nigeria (CBN)
  - eNaira
  - The CBN launched the eNaira in October 2021, with goals to increase financial inclusion, facilitate remittances, and support efficient domestic payments. It follows a phased rollout, gradually expanding in availability and features, including access to the underbanked and offline payment functionality.
- Bank of Jamaica (BOJ)
  - JAM-DEX
  - In 2022, the BOJ started a phased rollout of its retail CBDC after experiments and trials in 2021. It aims to reduce cash storage and management costs and help modernize the national retail payments infrastructure.

### Annex II: Reference Model and Technology Layers
- Annex Figure 2.1 highlights the various technology components typically involved in a digital asset ecosystem, such as a CBDC environment (see Monetary Authority of Singapore 2023). Central banks will typically have to deal with numerous technology providers, each providing or supporting an element of the CBDC ecosystem.

*Source: ftnea2023007 - Annex Table 1.1. Country Examples*

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_Source: https://www.imf.org/-/media/files/publications/ftn063/2023/english/ftnea2023007.pdf_