In mid-January 2022, the Eastern Caribbean Central Bank (ECCB) announced the outage of their central bank digital currency (CBDC), also known as Dcash. American-based Bitt helped the ECCB launch Dcash in , following up with a launch in of Nigeria's e-Naira. March 2021 October 2021 Since that time, Bitt has also launched a pilot electronic hryvnia test with Ukraine's TASCOMBANK in , while also unveiling NBB Pay, a stablecoin and digital payments infrastructure, for the National Bank of Belize in . December 2021 December 2021 While Bitt's success has helped to bring decentralized finance (DeFi) to many individuals in these nations, its recent Dcash outage is particularly concerning given the critically important nature of a CBDC. Without the ability to complete transactions, users on the Dcash platform are left in significant limbo, with this situation raising unique questions for legislators. It is essential for CBDCs to preserve the defining features of physical money, which includes the need to be constantly available in an offline format and to ensure consumer data privacy. With this in mind, what are some of the policy implications that government officials and central bankers can focus on to mitigate concerns over similar outages throughout CBDC networks? Cybersecurity concerns The stability of a CBDC must be one of the highest priorities for regulators. In this respect, protecting a CBDC's infrastructure from both internal and external threats should be top-of-mind for regulators. Cybersecurity risks and concerns must be integrated into contingencies associated with protecting CBDCs, with these values being validated in pilot-test CBDC frameworks. This type of advance testing will help ensure maximum flexibility in the event of any outage, such as Dcash's current failure, particularly in the case of a cybersecurity event. The implications of a cyberattack by a threat actor on a CBDC would be extremely damaging for any economy regardless of scale, particularly as payment continuity is simply a necessity for any national-level CBDC. If taken offline for even a brief period, a CBDC outage similar to the current Dcash situation might invoke a currency collapse because of it being a single point of failure, with significant implications during and after such an event. Additionally, a CBDC outage would also undoubtedly decrease consumer confidence in that specific medium of exchange, thereby reducing the influence and credibility of that central bank in this instance. Risk management operations The current Dcash outage also raises concerns over establishing contingency operations in the event of a specific CBDC outage. While there is currently no particular standard for establishing risk management operations for CBDCs, , including ISO/IEC 27005:2008, BB 7799-3:2006, and NIST SP 800-39 could be particularly applicable in establishing contingencies in the event of such an outage. general information technology standards Properly identifying, estimating, and evaluating risks must be integrated into CBDC development. Having proper governance response procedures to help manage such risks in the future will be essential for central banks to implement if moving forward with CBDC platforms. Industry standardization and development The high number of existing CBDC technologies presents a wide variety of different vendors for CBDCs, with some examples including Bitt's usage of for the ECCB, the Hong Kong Monetary Authority picking for Project Inthanon-LionRock, and Bhutan selecting for its CBDC project. IBM's Hyperledger Fabric ConsenSys Ripple Ensuring interoperability between different CBDCs is a specific policy issue that must be addressed given the growing CBDC development market. Additionally, reserve currencies must be considered for use in the event of a CBDC outage, thus potentially creating conflicts between primary and alternate CBDC platforms. Launching a CBDC would also transfer a high amount of critical technology risks to the government, and eventually, taxpayers. With this in mind, the ever-developing nature of blockchain and other emergent technologies present challenges for governments to test, regulate, and implement. It will be interesting to see how the public and private sectors interact in regards to supporting these types of technologies, particularly with these technologies having critical national security implications. In this case, protecting the public prominence of money is a must for governments and regulators, something that might present a significant challenge due to technology's pace of innovation. Conclusion All in all, the ECCB's Dcash outage provides central bankers, governments, and technology providers with the opportunity to reflect on the challenges emerging from system outages and failures. Addressing cybersecurity concerns, implementing risk management operations, and ensuring continued pace with developments in emerging technologies is important for regulators to incorporate into their CBDC pilot-tests and eventual programs. Ensuring proper governance over CBDCs and establishing legislation for specific issues like data privacy will also be necessary for regulators as CBDCs become increasingly prominent in the age of Web 3.0.

ConsenSys

 Hugh writes about cyberspace, digital currencies, economics, foreign affairs, and technology. 

Policy Implications Stemming from the ECCB's CBDC outage

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