My undergraduate thesis: Central Bank Cryptocurrencies

My learning journey at NUS wrapped up in 2023 when I submitted my honours thesis—a 10,000-word research paper that brought together the writing, research, and critical thinking skills I developed over four years in the undergraduate programme. It was my final submission before graduating with first-class honours. I’m proud to say it was graded A-minus—which, for context, is no small feat at NUS, where As are hard to come by (to me, at least).

My research explores how retail Central Bank Digital Currencies (CBDCs) are designed. For some background: central banks are the monetary authorities in a country (Singapore's central bank is MAS). They work with financial businesses—like commercial banks—to manage the flow of money in an economy, whether it’s physical cash or digital banking transactions.

CBDCs are digital versions of cash (think: digital notes and coins), but they’re not the same as regular digital banking transactions. Traditional e-banking transactions go through legacy systems like SWIFT, Mastercard, or VISA, and are recorded in bank-owned ledgers. CBDCs, on the other hand, are recorded directly by the central bank—often using blockchain technology, which has proven itself as viable technology given the widespread adoption of cryptocurrency.

So, what does this mean for you and me? If you're from a rich country, CBDC payments could be faster than regular bank transfers (no need to wait for inter-bank clearing), and in times of financial crisis—like a bank run—they’re more secure. That’s because they’re backed directly by the central bank, not indirectly through deposit insurance. If you're from a country less developed, with large unbanked populations, CBDCs also have the potential to offer digital financial services as a public good, meaning lower transaction and remittance fees compared to private banks.

The design of CBDCs vary from country to country. Some countries require full identity checks, while others let you register with just a phone number (this is known as partial user anonymity). Some even allow you to convert one country’s CBDC into another’s—what we call cross-border interoperability.

What drives these design choices? It depends on the central bank's policy goals. After analysing seven countries that have launched or are close to launching CBDCs, I found that:

1. Central bank only enable cross border interoperability if they want to lower remittance costs, improve currency stability, or strengthen enforcement of foreign exchange or capital controls.

2. Central banks enable partial user anonymity because they lack the political will to strengthen anti-money laundering or counter-terrorism financing regulations.

In the paper, I also dive into how I came to these findings, and what they mean for everyday users, the local banking sector, national governments, and international financial governance. If any of this has sparked your interest, feel free to download and read the full paper below!