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Earlier this month, the Bank of England released a working paper that describes three different central bank digital currency (CBDC) models, providing an outline of how it would operate in the banking industry, as well as possible scenarios of risk and financial stability issues.
The three outlines construct models depending on the sectors with access to CBDC.
The Financial Institutions Model
This model reportedly limits access to banks and non-bank financial institutions (NBFIs). This model is described as seemingly similar to reserve assets of the central Bank of England; however, there are differences including “broader access and different functionality
