Blockchain-Based Central Bank Digital Currency: Empowering Centralized Oversight With Decentralized Transactions

The advent of Central Bank Digital Currencies (CBDCs) represents a significant evolution in monetary systems, enhancing transparency, efficiency, and resilience in financial transactions. This research presents a comprehensive CBDC framework that integrates centralized databases with decentralized blockchain technology, aimed at strengthening monetary oversight and tackling challenges such as money laundering and financial irregularities. By employing blockchain’s immutable ledger, the proposed system supports secure and transparent digital transactions, thereby fostering trust and accountability in the financial ecosystem. Furthermore, the framework promotes financial inclusion by offering various transaction methods, such as internet-based payments, smart cards, and offline One-Time Password (OTP) systems. This diverse approach helps users in areas with limited internet access, effectively bridging critical gaps in digital accessibility and ensuring that everyone can participate in the digital economy. Through prototype development and empirical evaluation using tools like Ethereum, Geth, and web3.js, the study explores CBDC’s potential for sustainable economic development, offering insights into practical applications and future scalability.