A Context-Aware Secure Two-Tier Account-Based Retail Central Bank Digital Currency Framework: A Case Study of Tanzania

Abstract

Central bank digital currencies (CBDCs) are increasingly being explored as a means to enhance financial inclusion, reduce transaction costs and modernise payment systems. However, their design and implementation pose significant challenges, particularly in emerging economies such as Tanzania, where security risks, infrastructural constraints and interoperability issues persist in the digital financial services (DFS) ecosystem. This study proposes a context-aware, secure, two-tier, account-based retail CBDC framework for Tanzania, developed using the design science research (DSR) methodology. Furthermore, the proposed framework is structured around the access, service, asset and platform (ASAP) model and integrates the security-by-design principles, including zero-trust architecture, defence-in-depth and cryptographic agility. It further incorporates context-aware considerations, such as interoperability with existing mobile money systems, tiered know-your-customer mechanisms for financial inclusion, and support for connectivity and usability constraints. Moreover, the framework is demonstrated and evaluated using objective-based, security-oriented and contextual assessments. The evaluation indicated that the framework promises to provide a coherent and practical approach for the design of secure, interoperable and inclusive CBDC systems. This study contributes a prescriptive and contextually grounded CBDC design framework that offers both academic value and practical guidance for CBDC implementation in Tanzania and similar emerging economies.