The FIRE project explores the design requirements for cash-like digital payment systems as part of an efficient and robust payments infrastructure of the future.
Retail consumers are increasingly using digital payments technology to interact with the economy, leaving behind a data trail linking their habits, circumstances, travel, and relationships to a common profile. At the same time, the cost of maintaining an infrastructure to support cash is increasingly untenable, as the variable revenues fall below the fixed costs of operating that infrastructure. As a result, cash is disappearing from the set of payment options available to retail consumers. The coronavirus crisis has accelerated the trend toward ‘cashlessness’ as consumers make more ordinary purchases online and as brick-and-mortar shops refuse cash because of a perception of danger. Cash possesses important features such as accessibility, non-discrimination, privacy, and custodianship on the part of owners, and many of the prevailing solutions that have been proposed for central bank digital currency lack these features. Research conducted by the team has established that it is possible to design digital payment systems that possess cash-like features and are broadly consistent with regulatory objectives. If users have the option to hold value outside accounts, then these users will need personal devices that can store and exchange tokens.
The FIRE project’s research programme intends to evaluate the specific design requirements for user devices supporting a digital payment system with cash-like features, with particular consideration for the human-computer interaction, security, and trust properties that these devices would need to have.