Geccc iim iim iim consulting divisive consulting

Case studt

1. GLOBAL ECONOMICS CASE COMPETITION
TEAM OLD MONEY
Anuranjana Karan | Nishka Agarwal

2. SITUATION
Millions remain unbanked or underbanked due to high costs, low trust, and
limited digital access, highlighting the need for secure, inclusive, and scalable
crypto and CBDC solutions.
KEY QUESTIONS
How can decentralized identity
verification and AI regulations
address KYC and compliance
challenges for crypto adoption?
What role do micro CBDCs and
mobile wallet integration play in
overcoming rural technological
barriers for financial inclusion?
How can solar-powered kiosks and
rural banking agents bridge access
gaps while ensuring security in off-
grid regions?
SOLUTIONS
Local Agents
Cash-in/out services
Solar Kiosks
Off-grid payments
SMS Crypto
Feature phone access
Blockchain IDs
KYC-free verification
AI Compliance
Real-time regulation
Smart APIs
Seamless integration
Micro CBDCs
Small-value transactions
Wallet Integration
CBDCs + mobile money
Smart APIs
Rural accessibility
KEY IMPROVEMENT AREAS TO FOCUS ON
For Central Banks: For Financial Intermediaries:
Q: How can decentralized IDs improve
KYC efficiency and security?
Q: How can blockchain & smart
contracts reduce costs & boost liquidity?
1
2
3
4
1
2
3
4
Decentralized IDs for secure,
paperless KYC.
Advanced cryptography to protect
CBDC transactions and user data.
CBDC-crypto integration for seam-
less cross-border transactions.
Simple interface, SMS blockchain
for access in remote areas.
Smart contracts for low-cost,
efficient microtransactions.
AI & RPA for real-time fraud
detection and dynamic compliance.
Tokenization for fractional owner-
ship and broader market access.
Blockchain for faster asset transfers
and optimized liquidity.
STAGES OF GLOBAL ADOPTION OF CBDC
CBDC Global Overview: Tiered Country Model
Tier-1 Tier-2 Tier-3 Developed Countries
Bahamas: 100K wallets (25% of
population), 200K monthly transactions.
China: e-CNY reaching 7 trillion transactions
($986B) by June 2024.
Global CBDC
Choke Points
Key
Takeaways
Tier 1: Full integration, strong
government backing, regulatory
clarity
Tier 2: Scaling, regulatory complexity,
adoption barriers
Tier 3: Exploration, research, pilot
projects, focus on financial inclusion
Legacy Systems: Complex integration with traditional banking, especially in developing/underdeveloped regions
Regulatory Complexity: Multi-country jurisdictional challenges, compliance across borders
Adoption: Faster in Tier 1; slower in Tier 2/3 due to infrastructure and awareness gaps
Stakeholder Coordination: Varied models of government and private sector collaboration across regions
Developing Countries
Nigeria: 900K wallets (0.5% of population),
1 year of operational experience
-
India: 86% researching, 60% experimenting,
14% piloting
-134 countries exploring CBDCs (98% global
GDP)
-66 countries in development, pilot, or launch
phases
Decentralized ID & AI Regulations
Blockchain IDs: KYC-free verification
AI Compliance: Real-time regulation
Smart APIs: Seamless integration
Micro CBDCs & Mobile Money
Micro CBDCs: Small-value transactions
Wallet Integration: CBDCs + mobile money
Offline Blockchain: Rural accessibility
Rural Banking & Solar Kiosks
Local Agents: Cash-in/out services
Solar Kiosks: Off-grid payments
SMS Crypto: Feature phone access
Under Developed Countries
Approach: Initial exploration,
research phase
Operational Excellence
Cost efficiencywith mobile infrastructureand
decentralized agents for scalable, low-cost
solutions.
Customer Intimacy
Offer tailored services, build trust through
community, decentralized ID solutions.
Product Leadership
Innovate with blockchain, AI, CBDCs, smart
contracts, decentralized savings, and cross-
border interoperability.
Global CBDC Landscape: Current State and Key Insights
A Comprehensive Analysis of Central Bank Digital Currencies Across the World
Global CBDC Overview Tiered Implementation Strategies Consumer Adoption Journey Risk Mitigation Strategies Appendix1.

3. INDIA
CBDCshavethepotentialtostreamlinedigitaltransactionsand
expandfinancialaccessinTier-2developingcountrieslikeIndia.
However,adoptionis hinderedbyinfrastructuregaps,
regulatoryuncertainty,andpublicskepticism.
Key Challenges in CBDC Adoption
Regulatory Barriers:Unclear compliance guidelines
and banks' concerns over deposit erosion.
Infrastructure Constraints:Limited rural digital
connectivity and high setup costs.
Public Trust & Usability Issues:Privacy concerns, lack
of incentives, and the need for offline transactions.
Solutions to Drive Adoption
Strengthening
Infrastructure &
Security
CBDC Integration:
Linking e₹ with UPI and
mobile wallets for
seamless transactions.
Offline Access:
Enabling smart card and
USSD-based payments
for rural users.
Regulatory &
Institutional
Framework
AI Compliance:
Machine learning for
fraud detection and AML
monitoring.
Regulatory
Sandboxes:Testing CBDC
fintech solutions in
controlled environments.
Two-Tier Model:
Wallet holding limits to
prevent bank
disintermediation.
Driving Mass
Adoption & Public
Trust
Gamified Literacy:
Micro-CBDC rewards for
financial education.
Rural Banking
Agents:Merchants and
microfinance institutions
as cash points.
CBDC Incentives:Tax
rebates for merchants,
cashback for new users.
USA
TheU.S.isdevelopingaDigitalDollartoenhancefinancial
stability,globalcompetitiveness,andsecurity.TheFederal
ReserveistestingwholesaleandretailCBDCs,focusingon
interoperabilityandprivacytomaintaintheUSD’sdominance
Key Challenges in CBDC Adoption
Solutions to Drive Adoption
Regulatory and
Compliance
Framework
AI-Driven
Compliance: AI-powered
AML/CFT & RaaS APIs.
Decentralized
Identity: SSI KYC & ZKPs
for privacy.
Regulatory
Sandboxes: Fintech
testing & fast-track
approvals.
Infrastructure &
Security Solutions
Quantum-Resistant
Blockchain: Future-proof
CBDCs with quantum-safe
cryptography.
AI-Powered Fraud
Prevention: Smart
contracts & ML for real-
time risk monitoring.
Offline Transactions:
Smart cards & hardware
wallets for disaster
recovery.
Enhancing CBDC
Adoption & Financial
Inclusion
Retail CBDC: Instant
P2P payments &
settlements.
Interoperability:
Integrate with ACH,
FedNow, SWIFT &
crypto.
Incentives: Tax
benefits & "Earn-to-
Own" rewards.
BAHAMAS
Regulatory & Cross-
Border Strategy
Stronger
Compliance: Enhance
AML/CFT rules &
regulatory sandboxes.
Regional Integration:
Cross-border CBDC &
low-cost remittances.
Public-Private
Partnerships:
Collaborate with banks &
fintech for adoption
.
Privacy & Security: ZKPsfor anonymity, quantum
encryptionfor safety.
Stable Integration: Two-tier model, AI-driven
AML/KYCcompliance.
Mass Adoption: Tax benefits, transaction rewardsfor
users & businesses.
Limited Adoption: Low public trust and slow
merchant onboarding.
Infrastructure Gaps: Limited internet access and
outdated banking systems in remote areas.
Regulatory & Security Concerns: Need for stronger
AML/CFT frameworks and cybersecurity measures.
Strengthening
Financial Inclusion &
Adoption
Awareness &
Education: Digital literacy
campaigns & merchant
incentives.
CBDC Accessibility:
Offline payments via
smart cards & telecom
partnerships.
Govt Adoption:
Disburse subsidies & offer
tax benefits for
businesses.
Enhancing CBDC
Infrastructure &
Security
Resilient Networks:
Upgrade banking systems
& ensure payment
interoperability.
AI Fraud Detection:
Real-time AML/KYC
monitoring via
decentralized identity.
Quantum & Offline
Security: Quantum-safe
encryption & offline
transactions.
The Bahamas leads in CBDC adoption with the Sand Dollar,
focusing on financial inclusion, accessibility, and regional
interoperability.The government is driving adoption through
subsidies, merchant incentives, and offline payment solutions.
Solutions to Drive Adoption Solutions to Drive Adoption
CBDC Payment System & Customer Journey (Tier 1, 2, 3)
1
Transaction Initiation: User initiates payment
via CBDC wallet or integrated banking app.
2
Ledger Validation: CBDC ledger verifies
transaction authenticity and user balance.
3
Smart Contract Processing: Automated
conditions execute compliance checks
and settlement rules.
Merchant/Recipient Wallet Credit: Funds are
instantly transferred to the recipient’s CBDC wallet.
User Confirmation: Both sender and recipient
receive transaction confirmation in real time.
Key Challenges in CBDC Adoption
KEY
TAKEAWAYS
Quick Wins: DID, Earn-to-Own, Gamified Literacy, Community
Programs.
High-Impact Long-Term Investments: AI fraud detection,
Blockchain Mobile Money, AI Monetary Adjustments
Complex but Strategic: Blockchain, Quantum Security, Bio-Pay.
Tailored CBDC Solutions: A Tiered Approach for Global Economies
Strategies for Developed, Developing, and Underdeveloped Nations to Foster Effective CBDC Adoption
Global CBDC Overview Tiered Implementation Strategies Consumer Adoption Journey Risk Mitigation Strategies Appendix2.
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