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Digital fiat currency as a bearer instrument

Miles Au Yeung, eCurrency, Chief Markets Officer

eCurrency put forward digital fiat currency as a digital bearer instrument in a workshop attended by more than twenty six central banks, organized by Bank for International Settlement and hosted by Bank of Tokyo recently.

Digital fiat currency in the form of a digital bearer instrument possesses a number of distinctive characteristics of physical fiat currency.

  • Each bearer instrument has its own identification which makes it unique and traceable.

  • The identification and the denominated value are bound together with multiple security features to prevent and detect any alternation of the identification, value and security features.

  • The bearer instrument can be stored in any existing electronic payment systems and is used as a medium of exchange.

  • The exchange of the bearer instrument results in an instant settlement and the finality is certain.

This conceptualization of digital fiat currency as a bearer instrument is a contrast to the conceptualization as a payment system. In the former case, the supply of digital fiat currency is governed by the same legal framework of currency. In the later case, the supply of digital fiat currency is mired with laws and regulations related to deposit taking and payment services.

eCurrency presented its digital fiat currency solution that enables central banks to issue digital fiat currencies as uniquely identifiable, traceable and secure bearer instruments. Furthermore, the solution enables the central banks to distribute and circulate the digital fiat currencies in all existing and future payment systems utilizing various user access devices such as magnetic cards, NFC cards, USSD and smartphone applications.

eCurrency’s solution put forward a governance and market model whereby the role of currency supplier and the role of payment service providers are clearly delineated (Figure 1). This model simplifies and crystalizes the ramification of digital fiat currency issuance. It also fosters an open eco-system for licensed organizations to offer digital fiat currency based payment services to corporations and the general public.

Figure 1 - Delineation of currency supply role and payment service role

The digital fiat currency distribution and settlement infrastructure are provided to the digital fiat currency payment service providers through the open DFC interface (as shown in Figure 1), which is based on common programming languages and programming standards.

The eCurrency solution utilizes the highest level of upgradable hardware and software security technology and security best practices to make the digital fiat currency counterfeit-proof today and in the future. It ensures that digital instruments cannot be tampered, injected or removed at any point.

The hardware and software in the eCurrency solution is designed, architected and developed using best-in-class tried-and-tested technology components. It is designed and built to operate 24 x 7 non-disruptively and cost efficiently even for small value high volume transaction use cases.

The advantages of using eCurrency’s solution is that the central bank can maintain governance and security of the nation’s digital fiat currency while inviting market participants into the distribution and advancement of the digital fiat currency use cases through innovation. The digital fiat currency bearer instruments can be distributed to end user devices for fully off-line transactions in the future when the device technology is ready.


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