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Atul Khekade
Atul Khekade

Posted on • Updated on

[Informative] Implementing Central Bank Digital Currency (CBDC) on XDC Network

Implementing a Central Bank Digital Currency (CBDC) application on a XinFin XDC Network subnet involves creating a dedicated blockchain environment tailored for the CBDC's operations. This environment would prioritize security, efficiency, and compliance with regulatory standards. Given that subnets allow for customized blockchain settings, a CBDC application can benefit from tailored consensus mechanisms, privacy settings, and transaction rules.

Below is an illustrative example of how smart contract code for a CBDC on an XDC Network subnet could look. This example focuses on the basic functionality of issuing, transferring, and burning CBDC units, along with simple governance mechanisms. Note that in a real-world scenario, the complexity of the system would be significantly higher, requiring extensive collaboration with regulatory bodies, financial institutions, and technology providers.

Smart Contract for CBDC on XinFin Subnet


// SPDX-License-Identifier: MIT
pragma solidity ^0.8.0;

contract CBDC {
    address public centralBank;
    mapping(address => uint256) private balances;

    // Event declarations
    event Issued(address indexed to, uint256 amount);
    event Burned(address indexed from, uint256 amount);
    event Transferred(address indexed from, address indexed to, uint256 amount);

    modifier onlyCentralBank() {
        require(msg.sender == centralBank, "Only the central bank can perform this action");

    constructor() {
        centralBank = msg.sender; // The deploying address is the central bank

    // Issue CBDC to a specified address
    function issue(address to, uint256 amount) public onlyCentralBank {
        require(to != address(0), "Cannot issue to the zero address");
        balances[to] += amount;
        emit Issued(to, amount);

    // Burn CBDC from the central bank's balance
    function burn(uint256 amount) public onlyCentralBank {
        require(balances[centralBank] >= amount, "Insufficient balance to burn");
        balances[centralBank] -= amount;
        emit Burned(centralBank, amount);

    // Transfer CBDC between addresses
    function transfer(address to, uint256 amount) public {
        require(to != address(0), "Cannot transfer to the zero address");
        require(balances[msg.sender] >= amount, "Insufficient balance for transfer");

        balances[msg.sender] -= amount;
        balances[to] += amount;
        emit Transferred(msg.sender, to, amount);

    // Retrieve the balance of an address
    function balanceOf(address addr) public view returns (uint256) {
        return balances[addr];

    // Allow the central bank to transfer control to a new address
    function transferOwnership(address newCentralBank) public onlyCentralBank {
        require(newCentralBank != address(0), "New central bank cannot be the zero address");
        centralBank = newCentralBank;
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Deployment and Operation on a XinFin Subnet

Subnet Configuration: Before deploying the smart contract, ensure the subnet is configured with the appropriate consensus mechanism that aligns with the central bank's operational and security requirements. The XDPoS (XinFin Delegated Proof of Stake) consensus mechanism could be customized for enhanced control and efficiency.

Please also refer to :
XDC Subnet Installation Guide

Setting up Wallet for XDC Subnet

Smart Contract Deployment: Deploy the CBDC smart contract to the subnet. This contract will manage the issuance, transfer, and burning of the CBDC units.

Integration with Financial Institutions: Develop interfaces and APIs for financial institutions to interact with the CBDC smart contract for transactions such as issuing digital currency to public wallets, facilitating transfers, and managing liquidity.

Compliance and Reporting: Implement additional smart contracts or off-chain components as needed to ensure compliance with KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations, and to facilitate reporting and auditing processes.

Security and Testing: Conduct thorough testing and security audits of the smart contract and the overall system to ensure resilience against attacks, operational integrity, and compliance with regulatory standards.

This example provides a foundational framework for a CBDC application on a XinFin XDC Network subnet. Real-world implementation would require extensive customization, regulatory compliance checks, and collaboration with multiple stakeholders in the financial ecosystem.

Discussion (1)

cifi profile image
Circularity Finance

Thanks for this information Atul! This will be key to many of the current pilots on Circularity Finance. Looking forward to expanding more on this at your convenience.