Wholesale Central Bank Digital Currency Application

5 Wholesale Central Bank Digital Currency Application

The wholesale central bank digital currency (CBDC) sample application and related packages support transaction scenarios between a central bank and participating financial institutions.

Overview

Wholesale central bank digital currency is a digital form of central bank money intended primarily for commercial banks, financial market infrastructures, and other eligible financial institutions. Unlike retail CBDC, which supports consumer and merchant payments, wholesale CBDC supports institutional activities such as interbank payments, securities settlement, foreign exchange, collateral management, and cross-border transactions.

Commercial banks already use digital central bank money through reserve or settlement accounts at central banks and systems such as real-time gross settlement (RTGS). Therefore, wholesale CBDC does more than digitize central bank money. It makes central bank money available in tokenized and programmable financial infrastructures. In these environments, central bank money can interact more directly with tokenized securities, deposits, collateral, and other digital assets.

Wholesale CBDC in Financial Services

Wholesale central bank digital currency provides central bank money on programmable digital infrastructure for commercial banks and other eligible financial institutions. Wholesale CBDC can support interbank payments, settlement of tokenized securities, delivery versus payment (DvP), payment versus payment (PvP), collateral and repurchase agreement (repo) transactions, liquidity management, and potentially cross-border settlement. Wholesale CBDC can also complement tokenized commercial bank deposits. Customers can complete transactions using tokenized deposits issued by their respective banks, while banks settle the resulting interbank obligations using wholesale CBDC. The primary value of wholesale CBDC extends beyond digitizing central bank money. It enables central bank money to interact with tokenized assets, programmable transactions, and emerging digital financial market infrastructure while maintaining its role as a trusted settlement asset.

Oracle Implementation Advantages

The Oracle Blockchain Platform wholesale CBDC solution provides a ready-to-use, enterprise-grade foundation for wholesale CBDC operations. Its capabilities extend beyond a basic ERC-20 token implementation. The solution supports the full CBDC life cycle: creation, approval, issuance, transfer, return, and retirement. It combines this life cycle with institutional capabilities such as segregation of duties, role-based access, maker-checker approvals, transaction holds, account-level limits, participant and wallet management, configurable transaction purposes, audit workspaces, transaction history, and operational analytics. The solution simplifies deployment by integrating Besu smart contracts with wrapper APIs, wallet and organization services, rich history, identity services, and a role-based web application. One-click deployment automates the provisioning and connection of these components. Customers can configure and extend the solution to meet specific central bank and financial institution requirements. They can adapt the application's presentation, organizational model, roles and policies, smart contract logic, and web application.

Participants in a Wholesale CBDC Network

The central bank is the primary authority in a wholesale CBDC ecosystem. It typically issues and redeems wholesale CBDC, establishes eligibility requirements, defines governance and settlement rules, oversees the infrastructure, and determines the relationship between conventional reserve balances and their tokenized representation.

Commercial banks are typically the principal participants. They can hold and transfer wholesale CBDC, settle interbank obligations, participate in tokenized securities transactions, and integrate wholesale CBDC activity with their core banking, treasury, liquidity management, compliance, and regulatory reporting systems.

Business Workflow and Application Capabilities

The Oracle Blockchain Platform wholesale CBDC application supports the life cycle of wholesale central bank digital currency (CBDC). The life cycle includes participant onboarding, CBDC creation, issuance, institutional transfers, return of funds, and retirement.

The central bank establishes the token and participating organizations. It also creates the required wallets and CBDC accounts with defined application groups, ledger roles, and transaction limits. Participating financial institutions then create operational accounts for managers, officers, users, and auditors. The resulting network separates responsibilities among different roles (personas) and restricts the token operations that each participant can complete.

The creation and issuance processes use institutional maker-checker controls. A central bank creator requests a new CBDC supply, but the request remains pending until a central bank manager approves it. The system creates the tokens only after approval. The CBDC then becomes available to the creator, who can transfer it to the central bank issuer. When the issuer distributes CBDC to a participating financial institution, the application holds the issuance until a central bank manager approves it.

To retire CBDC, a central bank retirer requests its removal from circulation. The system burns the CBDC only after the appropriate approval. These controls separate responsibilities for creation, approval, issuance, and retirement. They prevent a single operational role from independently controlling the entire currency lifecycle.

The application also governs transfers between participating financial institutions. Financial institution officers and users can initiate transfers only to permitted recipients. The application places these transfers on hold until a financial institution manager approves them. Approval completes the held transfer, while rejection releases the hold without settling the transaction. Transactions can also include a configurable business purpose. Before processing a request, the application validates account status, available balance, daily amount limits, daily transaction count limits, and the appropriate approval context.

These capabilities distinguish the application from a standard ERC-20 implementation, which primarily supports fungible token balances, transfers, and allowances. The wholesale CBDC application adds institutional controls for registered organizations and CBDC accounts, role-based segregation of duties, configurable account limits, and account suspension and activation. It also supports transaction purpose management, transaction holds and approval workflows, controlled issuance and retirement, and separate administrative and auditor roles. Application groups determine the user experience and permitted workspace. Ledger roles determine which smart-contract operations an account can perform.

The solution also supports operational oversight, traceability, and auditability. Transaction history records information such as the initiator, counterparty, amount, purpose or memo, transaction type, timestamp, balance, and transaction identifier. The application provides dedicated read-only views for central bank and financial institution auditors. The central bank can also monitor operational indicators, including net supply, total value created and retired, participating organizations, and active or suspended accounts.

Customization and Extension Capabilities

Customers can customize and extend the wholesale CBDC application at multiple layers to align with a central bank's policy framework, operating model, participant structure, and user experience. The packaged application provides configuration options for organizations, accounts, roles, transaction limits, transaction purposes, and presentation. For additional customer-specific requirements, customers can extend the smart contracts, web application, and wrapper APIs. The current implementation separates account functionality from token functionality. The account contract manages registration, account status, limits, roles, and related operations. The token contract supports balances, issuance, transfers, holds, and retirement.

Smart Contract Extensions: Customers can extend the underlying smart contracts to implement CBDC-specific business and policy rules that aren't included in the packaged application. Potential extensions include more sophisticated transaction or holding limits, additional participant restrictions, and multilevel approval policies. Customers could also implement transaction purpose controls, additional administrative actions, or settlement conditions for specific use cases. The existing application extends standard ERC-20 functionality with transaction holds, governed issuance and retirement, account status, roles, limits, and approval workflows. Customers can build on this model to enforce additional central bank policies at the ledger level.
Wallet and Account Policies: Customers can customize controls that determine which participants and users can complete transactions and under what conditions. The packaged application associates CBDC accounts with specific organizations, users, wallets, application groups, ledger roles, daily maximum amounts, and daily transaction count limits. Accounts can also be suspended and reactivated when permitted. Customers can extend this model with additional wallet authorization and institutional policies, such as wallet eligibility rules and transaction authorization requirements.
Approval and Governance Extensions: The application separates responsibilities among central bank creator, issuer, manager, retirer, and auditor roles. It also separates responsibilities among financial institution administrator, manager, officer, user, and auditor roles. Managers use the escrow ledger role to approve governed operations. They can approve supported requests individually or in bulk. Customers who require different governance structures can extend these workflows with additional approval stages, institution-specific approval hierarchies, or other policy-driven authorization models.
Web Application Customization: Customers can customize the application's terminology and branding without changing the underlying blockchain permissions. The packaged application supports customization of the login message and image, background, token and account display names, currency and number formats, and language. Customers can also customize organization names and logos, application group labels, transaction labels, and ledger role labels. For additional requirements, customers can extend the web application with dashboards, business workflows, data fields, reports, approval journeys, or role-specific screens.
API and Enterprise Integration Extensions: The application uses a wrapper API to route account, token, organization, and transaction operations between the web application and the underlying services. Customers can build additional application workflows around these APIs or extend the integration layer to connect the wholesale CBDC application with existing financial infrastructure. Potential integrations include real-time gross settlement (RTGS) and reserve account systems, core banking systems, and treasury and liquidity management platforms. Other potential integrations include regulatory reporting, identity and compliance systems, securities platforms, and tokenized deposit applications. These external integrations are potential customer extensions.