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Appendix 2: Glossary
Blockchain
Blockchain refers to a method of recording transactions in a shared distributed ledger that makes the information immutable using cryptography. The blockchain ensures the validity and integrity of each record in each block.
Central bank money
Central bank money is issued by a central bank and is a liability of the central bank. It may
either be physical money (traditionally notes
and coin) or digital (traditionally settlement accounts with the central bank). It is either made available to the public (retail use) – traditionally, in physical form or is restricted in use to financial institutions to enable settlement with each other – traditionally, via settlement accounts. Notes and coin can be deemed as a form of token, but with the advent DLT, it enables the creation of
a token-based digital form of money (CPMI and MC, 2018). Also referred to as public money in this paper.
Central bank digital currency
A central bank digital currency (CBDC) is a digital form of central bank money which may be issued for either retail (rCBDC) or wholesale (wCBDC) use. CBDC may be either token/value- based or account based (CPMI and MC, 2018).
Central counterparty
An entity that interposes itself between counterparties to contracts traded in one or more financial markets, becoming the buyer
to every seller and the seller to every buyer and thereby ensuring the performance of open contracts (CPMI-IOSCO, 2012).
Central securities depository
An entity that provides securities accounts, central safekeeping services and asset services, which may include the administration of corporate actions and redemptions, and plays an important role in helping to ensure the integrity of securities issues (i.e. ensures that securities
are not accidentally or fraudulently created or destroyed or their details changed) (CPMI- IOSCO, 2012).
Collateral
An asset or third-party commitment that is used by a collateral provider to secure an obligation vis-à-vis a collateral taker (CPMI-IOSCO, 2012).
Cross-border payment
A payment in which the financial institutions of the payer and the payee are located in different jurisdictions (ECB, 2009).
Crypto asset
A crypto asset is a digital representation of
value that is not issued by a central bank, but is capable of being traded, transferred or stored electronically by natural and legal persons for the purpose of payment, investment and other forms of utility; applies cryptographic techniques and uses DLT (CAR WG, 2021). Less formally, referred to as cryptocurrency.
Custodian
An entity that safekeeps and administers securities or other assets for its customers and that may provide various other services, including clearing and settlement, cash management, foreign exchange transactions, securities lending and collateral management (ECB, 2009; CPSS, 2003).
Decentralised finance
The term decentralised finance (DeFi) refers to an alternative financial infrastructure built on top of the Ethereum blockchain. DeFi uses smart contracts to create protocols that replicate existing financial services in a more open, interoperable and transparent way (Schär, 2021).
Delivery-versus-payment
A securities settlement mechanism that links a securities transfer and a funds transfer in such a way as to ensure that delivery occurs if and only if the corresponding payment occurs (CPMI- IOSCO, 2012).
APPENDICES
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