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International Conference on Metaverse and Current Trends in Computing (ICMCTC)

Central Bank Digital Currency (CBDC) 3.0: Quantum Ledger-Based Multi-Currency Smart Exchange System

Mohamed Aswith. H, Densingh Joshua Israel, V.V.Kashimma, Chikati Madhava Rao, Polepaka Sanjeeva, Jumaniyozova Muhabbat Xusinovna

Published Apr 10, 2025• 1 citation
Publisher

Abstract

Despite rapid evolution of digital currencies, the demand for secure, fast and scalable cross border payment solution has emerged. At the moment, the frameworks for the existing Central Bank Digital Currency (CBDC) are slow for transactions, lack security, and are not capable of adjusting to the dynamic changes with respect to the exchange rate. This paper therefore suggests a novel Quantum Ledger Based Multi Currency Smart Exchange System (QL-MSES) to counter challenges Quantum computers are capable of, quantum cryptography, quantum ledger technology and machine learning driven prediction models. The real time sound synchronization of global transactions as well as unbreakable encryption are performed in Quantum Key Distribution (QKD) and Quantum Entanglement Protocol (QEP systems in this system. AI-PEX proxies the rest of the world using deep reinforcement learning, and the remainder of the world input is passed through ACMA which dynamically selects the best exchange paths. In addition, the system includes the Homomorphic Encryption and Zero-Knowledge Proofs system, hence allowing the flow of information without jeopardizing the user’s privacy and without violating regulatory compliance. With this evaluation, this proposed QL-MSES is enabled to be faster with transactions, secured with data, and agile in exchanges when markets are volatile. The results of the performance evaluation show that QL-MSES offers higher efficiency and security than a conventional CBDC system. By employing this innovative solution, the applications of CBDC 3.0 can be utilised for cross border remittance, smart treasury management and decentralised finance, a revolutionary structure to adopt CBDC 3.0.

DOI
10.1109/icmctc62214.2025.11196259

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Despite rapid evolution of digital currencies, the demand for secure, fast and scalable cross border payment solution has emerged. At the moment, the frameworks for the existing Central Bank Digital Currency (CBDC) are slow for transactions, lack security, and are not capable of adjusting to the dynamic changes with respect to the exchange rate. This paper therefore suggests a novel Quantum Ledger Based Multi Currency Smart Exchange System (QL-MSES) to counter challenges Quantum computers are capable of, quantum cryptography, quantum ledger technology and machine learning driven prediction models. The real time sound synchronization of global transactions as well as unbreakable encryption are performed in Quantum Key Distribution (QKD) and Quantum Entanglement Protocol (QEP systems in this system. AI-PEX proxies the rest of the world using deep reinforcement learning, and the remainder of the world input is passed through ACMA which dynamically selects the best exchange paths. In addition, the system includes the Homomorphic Encryption and Zero-Knowledge Proofs system, hence allowing the flow of information without jeopardizing the user’s privacy and without violating regulatory compliance. With this evaluation, this proposed QL-MSES is enabled to be faster with transactions, secured with data, and agile in exchanges when markets are volatile. The results of the performance evaluation show that QL-MSES offers higher efficiency and security than a conventional CBDC system. By employing this innovative solution, the applications of CBDC 3.0 can be utilised for cross border remittance, smart treasury management and decentralised finance, a revolutionary structure to adopt CBDC 3.0.
This study examines the convergence of rapid Central Bank Digital Currency adoption and the growing threat that quantum computing poses to existing cryptographic systems. As digital sovereign currencies expand globally, with many economies actively exploring or piloting CBDCs, the vulnerability of classical public key cryptography to quantum attacks creates an urgent need for quantum resistant solutions. The research responds to this challenge by developing an evaluation framework focused on secure and interoperable cross border CBDC systems in a post quantum environment. Using desk based computational analysis and simulation methods suitable for remote researchers, the study evaluates lattice based algorithms standardized by the National Institute of Standards and Technology, specifically ML KEM for key encapsulation and ML DSA for digital signatures. The analysis confirms strong quantum resistance against known quantum algorithms, effectively removing harvest now decrypt later risks for future transactions. Interoperability assessments show that ISO 20022 with cryptographic abstraction is well suited for retail CBDC systems, while bridge based architectures such as BIS mBridge are more effective for wholesale settlements. Performance testing on thousands of simulated transactions indicates that post quantum protocols are feasible for wholesale use but introduce significant computational and bandwidth overheads that limit immediate retail scalability without hardware acceleration. Overall, the findings support a phased migration strategy that combines classical and post quantum cryptography in the near term, guided by cryptographic agility. The study provides practical insights for central banks seeking to balance security, efficiency, and cross border compatibility in an evolving quantum threat landscape.
This study examines the convergence of rapid Central Bank Digital Currency adoption and the growing threat that quantum computing poses to existing cryptographic systems. As digital sovereign currencies expand globally, with many economies actively exploring or piloting CBDCs, the vulnerability of classical public key cryptography to quantum attacks creates an urgent need for quantum resistant solutions. The research responds to this challenge by developing an evaluation framework focused on secure and interoperable cross border CBDC systems in a post quantum environment. Using desk based computational analysis and simulation methods suitable for remote researchers, the study evaluates lattice based algorithms standardized by the National Institute of Standards and Technology, specifically ML KEM for key encapsulation and ML DSA for digital signatures. The analysis confirms strong quantum resistance against known quantum algorithms, effectively removing harvest now decrypt later risks for future transactions. Interoperability assessments show that ISO 20022 with cryptographic abstraction is well suited for retail CBDC systems, while bridge based architectures such as BIS mBridge are more effective for wholesale settlements. Performance testing on thousands of simulated transactions indicates that post quantum protocols are feasible for wholesale use but introduce significant computational and bandwidth overheads that limit immediate retail scalability without hardware acceleration. Overall, the findings support a phased migration strategy that combines classical and post quantum cryptography in the near term, guided by cryptographic agility. The study provides practical insights for central banks seeking to balance security, efficiency, and cross border compatibility in an evolving quantum threat landscape.
This paper explores the coexistence possibilities of Central Bank Digital Currencies (CBDCs) and blockchain-based cryptocurrencies within a post-quantum computing landscape. It examines the implications of emerging quantum algorithms and cryptographic techniques such as Multi-Party Computation (MPC) and Oblivious Transfer (OT). While exploring how CBDCs and cryptocurrencies might integrate defenses like post-quantum cryptography, it highlights the substantial hurdles in transitioning legacy systems and fostering widespread adoption of new standards. The paper includes comprehensive evaluations of CBDCs in a quantum context. It also features comparisons to alternative cryptocurrency models. Additionally, the paper provides insightful analyses of pertinent quantum methodologies. Examinations of interfaces between these methods and blockchain architectures are also included. The paper carries out considered appraisals of quantum threats and their relevance for cryptocurrency schemes. Furthermore, it features discussions of the influence of anticipated advances in quantum computing on algorithms and their applications. The paper renders the judicious conclusion that long-term coexistence is viable provided challenges are constructively addressed through ongoing collaborative efforts to validate solutions and guide evolving policies.
Abstract This paper explores the coexistence possibilities of Central Bank Digital Currencies (CBDCs) and blockchain-based cryptocurrencies within a post-quantum computing landscape. It examines the implications of emerging quantum algorithms and cryptographic techniques such as Multi-Party Computation (MPC) and Oblivious Transfer (OT). While exploring how CBDCs and cryptocurrencies might integrate defenses like post-quantum cryptography, it highlights the substantial hurdles in transitioning legacy systems and fostering widespread adoption of new standards. The paper includes comprehensive evaluations of CBDCs in a quantum context. It also features comparisons to alternative cryptocurrency models. Additionally, the paper provides insightful analyses of pertinent quantum methodologies. Examinations of interfaces between these methods and blockchain architectures are also included. The paper carries out considered appraisals of quantum threats and their relevance for cryptocurrency schemes. Furthermore, it features discussions of the influence of anticipated advances in quantum computing on algorithms and their applications. The paper renders the judicious conclusion that long-term coexistence is viable provided challenges are constructively addressed through ongoing collaborative efforts to validate solutions and guide evolving policies.
The growing risk of quantum computing means that criminals will find it needless to adopt quantum-safe solutions, specifically in protecting the Central Bank Digital Currencies (CBDCs) and economic infrastructures. The present paper suggests a Quantum-Safe Cryptographic Framework as a combination of Post-Quantum Cryptography (PQC) and Quantum Key Distribution (QKD) to provide security to financial transactions. The paper describes the main architecture, that is, three layers: Cryptographic Primitive, Secure Communication and Key Management, and Application Layer, where quantum-safe algorithms such as Kyber (ML-KEM) are used to encrypt information and Dilithium is used to sign it. The major statistical implications are that the quantum-safe framework versus classical RSA/ECC systems leads to the reduction of throughput (850 TPS vs. 1000 TPS) and the increase of latency (54 ms vs. 45 ms) by 15 and 20 %, respectively. The computational cost of PQC algorithms also increases by 25 % and 1.5 J in the quantum-safe system and 1.2 J in the classical system, respectively. In spite of these trade-offs, the quantum-safe framework offers the much-needed protection against quantum threats, which proves that it is possible to protect digital financial infrastructures. The migration plan (the Sandwich Approach) proposed would enable seamless implementation of PQC with old systems throughout the transition process, such that the system remains stable and operational. Future work will involve optimization of PQC algorithms to minimize the performance overhead and look into Quantum Money and AI-based detection systems to detect cyber threats caused by quantum. This paper highlights the importance of urgent adoption of quantum-resistant systems to protect the future of national financial systems.
The introduction of a Central Bank Digital Currency (CBDC), such as the Digital Euro, presents a critical challenge to commercial bank liquidity management due to the potential for large-scale deposit conversion, with the ECB estimating deposit drains of up to EUR 700 billion under extreme scenarios. This paper proposes a novel Quantum-Enhanced Deep Reinforcement Learning (QDRL) framework to optimize commercial bank funding strategies under CBDC-induced liquidity stress. By integrating a Variational Quantum Circuit (VQC) into the Soft Actor-Critic (SAC) algorithm, the QSAC agent minimizes funding costs while maintaining regulatory liquidity buffers across a five-bank simulation network with interbank contagion dynamics. The paper rigorously addresses the barren plateau problem through theoretical analysis and empirical gradient variance measurements, and stress-tests the framework under NISQ noise models calibrated to IBM Quantum hardware using Zero Noise Extrapolation. Results show an 8.1% funding cost reduction over classical DRL baselines and zero LCR breaches across four calibrated stress scenarios, though the advantage narrows to 3.2% against industry-standard MPC benchmarks. A Quantum Explainable AI analysis further interprets the agent's decision-making, identifying LCR and CBDC flow as the most influential features. While results remain simulation-only pending fault-tolerant quantum hardware, this research positions QDRL as a promising tool for financial stability and regulatory readiness in the evolving era of central banking.