The Central Bank of Central Banks, Switzerland's Bank for International Settlements (BIS), released a report on Sunday that looks at central bank cryptocurrencies (CBCCs), and if they would they be useful.

The 17-page report, titled "Central Bank Cryptocurrencies," was co-written by Morten Bech and UC Santa Barbara's Rodney Garratt.

The report outlines that bitcoin has gone from being an obscure curiosity to a household name in less than a decade. "Its value has risen - with ups and downs - from a few cents per coin to over $4,000," the authors clarify. "In the meantime, hundreds of other cryptocurrencies - equalling bitcoin in market value - have emerged."

Central banks have recently entered the fray, with several announcing that they are exploring or experimenting with the underlying technologies. "The prospect of central bank crypto- or digital currencies is attracting considerable attention," the report states. "But making sense of all this is difficult."

"New cryptocurrencies are emerging almost daily, and many interested parties are wondering whether central banks should issue their own versions. But what might central bank cryptocurrencies (CBCCs) look like and would they be useful?"

- Bank for International Settlements

There is confusion over what these new currencies are and discussions often occur without a common understanding of what is actually being proposed, the authors claim, and they propose a new classification system, or "taxonomy of money."

The framework seeks to provide some clarity by answering a deceptively simple question: "what are central bank cryptocurrencies (CBCCs)?"

The taxonomy is based on four key properties; issuer, central bank or other; form, electronic or physical; accessibility, universal or limited; and transfer mechanism, centralised or decentralised.

The report states that it reflects "what appears to be emerging in practice," and distinguishes between two potential types of CBCC, both of which are electronic: central bank-issued and peer-to-peer. One is accessible to the general public (retail CBCC) and the other is available only to financial institutions (wholesale CBCC).

The money flower: a taxonomy of money

In principle, the authors argue, there are four different kinds of electronic central bank money: two kinds of CBCCs (the shaded area) and two kinds of central bank deposits. The most familiar forms of central bank deposits are those held by commercial banks - often referred to as settlement accounts or reserves.

Universally accessible forms of money that are not issued by the central bank include privately created cryptocurrency, commodity money, commercial bank deposits and mobile money.

"Cryptocurrency borders CBCC given that only one of its properties differs. The other three currency forms are more removed because they are, in addition, either physical or 'not peer-to-peer'," the report states. A number of other forms of money are not universally accessible.