5.5 Technical Technology agnostic: CBDC solutions should be built to interoperate with DLT and non-DLTbased solutions and be interoperable across chains, including private, permissioned or public blockchains. In a CBDC system with intermediaries, the design will need to support payment portability to avoid users being locked into a single intermediary. Messaging standardization: Establishing common technical standards is important for interoperability. This includes defining uniform data formats, communication protocols, messaging standards, encryption mechanisms and transactional interfaces. Common standards, like ISO 20022 and common blockchain standards, can be used to ensure seamless integration with different payment systems. Connectivity: CBDC systems should be designed with secure connections, which requires defining compatible network protocols, secure communication channels and reliable data exchange mechanisms. Inter-ledger compatibility: CBDC systems should be compatible with existing payment infrastructures, including traditional payment systems and other DLT based systems. Inter-ledger compatibility enables interoperability between CBDCs based on different blockchains (or non-DLT based). Open-source code bases can be considered to promote compatibility. Interoperable APIs: CBDC systems should provide well-defined and standardized APIs that allow easy integration with legacy payment systems and other financial infrastructure. These APIs should support transaction processing, settlement, identity verification and data exchange, enabling seamless integration. Bridging mechanisms: To achieve interoperability with cryptocurrencies and stablecoins, CBDC should incorporate bridging mechanisms that enable the transfer of value between different blockchain networks. These bridging mechanisms could use technologies like atomic swaps, interoperability protocols or interoperability-focused blockchains to facilitate the exchange of assets between CBDC and other digital currencies. Bridging should be compatible, standardized and part of interoperability APIs. Security and privacy: Robust security measures should be implemented to protect the integrity of CBDC systems and ensure user privacy. This involves employing strong encryption algorithms, secure key management practices, authentication mechanisms and privacy-enhancing technologies like zero-knowledge proofs, etc. Verification of data should be possible without revealing the actual contents of the data to the verifier. Secure and trusted oracles: Oracles play a crucial role in interoperability between CBDC and external systems, providing trusted real-time data on asset prices, exchange rates and transaction details. CBDC systems should incorporate robust and secure oracle mechanisms that ensure the accuracy, reliability and integrity of the information obtained from external systems. Testing and certification: CBDC systems should undergo rigorous testing and certification processes to validate their interoperability and security. Independent audits and assessments can help identify potential vulnerabilities and ensure compliance with technical standards. Stability and upgradeability: CBDC interoperability should be stable and behave deterministically. Upgradeability for the system should be designed as a proper protocol in order to effectively exchange upgrade details in advance, allow institutions to prepare for the upgrade and eliminate any downtime. Robust security measures should be implemented to protect the integrity of CBDC systems and ensure user privacy. Central Bank Digital Currency Global Interoperability Principles 31
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