Are central banks thinking radically enough about CBDCs? (18 May 2022)

[MAY 2022]

The Webinar May 18 at 2pm UK time

“We have yet to hear a convincing case for why the UK needs a retail Central Bank Digital Currency (CBDC),” concluded a report of January 2022 from the Economic Affairs Committee of the House of Lords. “While a CBDC may provide some advantages, it could present significant challenges for financial stability and the protection of privacy.” The Committee included a former Governor of the Bank of England and a distinguished economic historian (of the “What would Keynes do?” school). Despite such sceptical voices, the Atlantic Council CBDC Tracker lists 78 retail CBDC projects currently being pursued by central banks around the world and only six that have a wholesale component. Of course, every jurisdiction is different. Each country that has issued a CBDC (the Bahamas) or is experimenting with one (China, the Eastern Caribbean and Nigeria) has its own reasons. For most, the limited reach of conventional banking systems is a major factor. A related concern is the possible cession of monetary sovereignty to crypto-currencies or Stablecoins controlled by private interests. Some (Iran and Russia as well as China) see a CBDC as part of a geopolitical strategy to undermine the dominant position of the US dollar and circumvent reliance on payments systems controlled by geopolitical opponents. In the developed economies of the G7, the momentum is shifting from retail CBDCs back to wholesale CBDCs, where the potentially disruptive effects can be contained within the existing banking system. The emerging use-cases include cross-border payments, trade finance and securities settlement, where numerous experiments led by central banks have proved the technology works. However, concerns that a CBDC might disrupt correspondent banking networks, or undermine the funding of commercial banks with consequently deleterious effects on their capacity to lend, might be fostering an unduly conservative approach in the developed economies. After all, CBDCs also represent an opportunity to re-think the relationship between monetary policy and fiscal policy and how credit is created and distributed in a sophisticated modern economy suffering from pockets of inequality as well as illiquidity. At this webinar, Future of Finance re-visits the arguments for and against retail CBDCs, examines use-cases for wholesale CBDCs and asks whether central banks need to see CBDCs as a massive opportunity to re-design the way money and data flow throughout economies rather than a systemic threat to financial stability.

The topics to be discussed will include:

1. Has the momentum towards the introduction of CBDCs stalled?
2. Is the choice between retail and wholesale CBDCs always sui generis?
3. Must a CBDC design always entail trade-offs?
4. Are CBDCs a substitute for Stablecoins or a complement to them?
5. To what extent is international agreement on operating rules and standards a pre-condition of realising the full benefits of CBDCs?
6. Is the case for using CBDCs to make cross-border payments cheaper, faster and easier now settled?
7. What benefits do CBDCs offer the trade finance industry?
8. Is securities settlement now the primary use-case for a wholesale CBDC?
9. Could a CBDC empower central banks to influence economic conditions directly rather than via the banking system?
10. How could a CBDC be used to create credit?

Panellists:

Ricardo Correia, Head of Digital Currencies at R3

Ricardo currently leads Product Business Development for Digital Currencies (CBDC and Stablecoins) at R3. He and his team have spent the last 12 months developing and running a global CBDC working group with over 100 members, including major central banks from around the world.

Ricardo initially served as Head of APAC at R3 for the first 18 months, growing the team and working with member banks across the region. He then spent 3 years as Global Head of Strategic Alliances & Partnerships, building a network of 300+ global partners who develop solutions and offer services on Corda.

Before joining R3 Ricardo worked with the Commonwealth Bank of Australia, Avanade, Accenture and Microsoft in senior, executive positions. He’s co-founded two technology startups and has spent the last 12 years commercializing early-stage, emerging technologies.

https://www.linkedin.com/in/ricardo-m-correia/

Gilbert Verdian, CEO and Founder at Quant Network

As CEO and Founder of Quant, Gilbert is focused on unlocking the power of blockchain for everyone, to create an empowered, interconnected world.

Gilbert has more than 20 years of cybersecurity experience and C-level accountability as a CISO, CIO and CTO. He has worked in government – for Downing Street, HM Treasury, the Cabinet Office, Ministry of Justice and NSW Health – and has also served in the private sector, at Mastercard, Vocalink, CSC, EY, PwC,
BP and HSBC.

With a keen interest in disruptive technology, Gilbert established the Blockchain ISO Standard TC307 initiative in 2015 and is the Convenor of the the Interoperability working group WG7 for ISO.

https://www.linkedin.com/in/gverdian/

Vadim Sobolevski, Strategy and Development at FutureFlow

Prior to starting FutureFlow in 2016, Vadim had spent 9 years after business school analyzing macroeconomic trends and financial systems around the world, most recently as Portfolio Manager at the hedge fund Finisterre Capital in London

Prior to business school, Vadim had spent 8 years as a software engineer, most recently at the Fixed Income desk of Barclays Capital in New York City. Vadim is a graduate of Columbia University and Harvard Business School.

https://www.linkedin.com/in/sobolevski/

Jake Hartley, Business Development Director and CBDC SME at Fnality International

Jake Hartley is a Business Development Director and CBDC SME at Fnality International, the creators of a network of regulated payment systems supported by a central bank money-backed digital cash asset of the highest order.

Through their solution – Fnality Global Payments – Fnality will increase operational resilience, make risk management more transparent, and make processes more efficient. Fnality is supported by 15 major financial institutions, has deep relationships with global central banks, and a unique insight into central bank digital asset policy.

For almost three years, Jake has been collaborating closely with Fnality’s shareholder base and business partners to drive the growth and commercialisation of the Fnality proposition, and to inform key stakeholders across financial markets of the benefits their Fnality Global Payments solution will bring. Prior to that he was driving the commercial side of the blockchain proposition for PwC UK.

https://www.linkedin.com/in/jake-hartley/

John Whittaker, Economist at Lancaster University

John Whittaker is an Economist at Lancaster University, specialising in monetary policy, banking and financial markets, and central bank operations.

His current interests include the transmission of interest rates and quantitative easing, the mechanics of the eurosystem, and alternative currency regimes.

Between 2004 and 2009 he served as a Member of the European Parliament for the UK Independence Party and was a member of the Parliament’s Economic and Monetary Committee.

Moderated by Dominic Hobson, Co-Founder at Future of Finance

Dominic Hobson has worked for himself for 30 years. He was one of the founders of Asset International, a transatlantic financial publishing, events and survey business, which was sold in 2009.

Since then, Dominic has contributed to the work of two data businesses covering financial markets, run a peer group network for hedge fund managers, and co-founded the Future of Finance, which hosts events on innovation in finance.

As one half of Hobson Cardew, Dominic also provides consultancy services to a number of financial services businesses and market infrastructures.

https://www.linkedin.com/in/dominic-hobson-49b8222/

For further information please contact Wendy Gallagher on wendy.gallagher@futureoffinance.biz