CBDCs Part II Summary 16 January 2021

A SUMMARY AND FULL REVIEW OF THE DISCUSSION AT THE WEBINAR ON 16 JANUARY 2021

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SUMMARY

All central banks that matter, prompted by mounting concern about losing control of money to some combination of Stablecoins and crypto-currencies, have moved within two years from scepticism about central bank digital currencies (CBDCs) to planning to issue one.

The vast majority of planned CBDCs are retail, not wholesale, because these are most promising in terms of socio-economic impact and efficiency-enhancing innovation.

Wholesale CBDCs are being considered mainly for RTGS upgrades, though hybrid retail-wholesale CBDCS remain a possibility.

Central banks will not offer retail accounts; most CBDC plans envisage retaining private commercial banks as distributors, largely to protect the funding of private banks and their ability to lend, but also because central banks lack the expertise to run private accounts.

Caps on the value of CBDC deposits and tilting rates of interest in favour of private bank deposits could offer private commercial banks additional protection from the potentially unfavourable consequences of a CBDC.

Risk mitigants of these kinds can be programmed into a CBDC by an issuing central bank. So can financial crime monitoring criteria and privacy safeguards. Private banks could also programme a CBDC to offer customers benefits such as Internet of Things (IoT) micro-payments.

Lack of anonymity in CBDCs raises issues of personal privacy and civil liberty. The same considerations are likely to divert some transactions into Stablecoins or even crypto-currencies.

CBDCs are likely to trigger a shift from an account-based system intermediated by banks to direct payments between the digital wallets of payers and payees without bank intermediation. Central banks welcome the contribution this can make to innovation and competition.

In theory, CBDCs can also cut domestic and cross-border payments transaction costs, by reducing liquidity dedicated to inefficient payments processes and reducing bank intermediation of cross-border payments.

At present, the need for liquidity, FX services and identity checks inhibit the realisation of the gains in cross-border payments in particular. Central banks could contribute to solving these problems by collaborating on the design of their CBDCs, linking payment systems and even issuing a multinational CBDC.

However, CBDCs at the national level will always bear the imprint of strictly national operational, commercial, regulatory, cultural and especially fiscal considerations. No government will want a CBDC to compromise its ability to tax and spend.

CBDCs, unlike cash, require all consumers to have access to broadband or a mobile telephone. For some consumers in some markets this will necessitate the provision of CBDCs through upgraded Automated Teller Machines (ATMs), perhaps dispensing tokens with chips.

CBDCs are unlikely to displace Stablecoins and crypto-currencies because alternative currencies can provide additional services, and some consumers will prefer the greater assurance of privacy they provide.

CBDCs impose technology selection and project management costs on central banks. Almost all experiments are using enterprise blockchain technology, though the People’s Bank of China (PBOC) is an important exception. There is a risk that technology choices will hamper CBDC inter-operability.
Successful CBDCs have consequences that will reverberate throughout economies and societies, from individual consumers to giant corporations, which is why central banks are proceeding cautiously, and weighing every risk and benefit carefully.

Use-cases for a CBDC are legion, but include direct payments to citizens, elimination of Herstatt Risk in the FX markets, micro-payments in an IoT economy, and automation of contractual payments. CBDCs also represent a golden opportunity or banks to reinvent themselves.

FULL REVIEW

Official views of the desirability of central bank digital currencies (CBDCs) have evolved rapidly. From being deeply uncomfortable with the idea as recently as 2018, dozens of central banks have now moved to a position in which almost all have issued a description of their preferred design for a CBDC and some are actively exploring and experimenting with CBDCs in pilot and even in issue.

Retail rather than wholesale CBDCs are making the running

Importantly, the preferences of central banks have also shifted from wholesale CBDCs to retail ones. In December 2020, the Bank for International Settlements (BIS) data recorded 41 retail CBDC projects in hand at central banks and 16 wholesale CBDC projects, but only five of those wholesale projects are not also looking at a retail CBDC.

In January 2021 the Kiffmeister blog recorded 50 retail CBDCs in train at central banks around the world. Seven were either launched or at the proof of concept or pilot testing stage, while 34 were definitely being explored and a further nine reported to be being explored.

So the momentum in CBDCs is running in favour not of a wholesale CBDC, which would remain a purely inter-bank phenomenon, but of retail CBDCs, in which the CBDC will be a direct cash-like claim on the central bank, and in most cases distributed and operated by private commercial banks.

Wholesale CBDCs are being considered mainly for RTGS upgrades

In fact, the wholesale CBDCs under consideration are focused mainly on upgrades of existing Real Time Gross Settlement (RTGS) systems operated by central banks. These central banks are clearly not discouraged by the 2018 decision of the Bank of England, in renewing its RTGS system, specifically to eschew blockchain technology as insufficiently mature.

The Bank of England was nevertheless careful to stipulate that blockchain-based firms could still connect to its new RTGS. It has since speculated in its published work on CBDCs about building an entirely separate central bank money settlement infrastructure alongside its upgraded RTGS.

What has changed since 2018 is the realisation that wholesale CBDCs offer little, by comparison with retail CBDCs, in terms of impactful innovation on economies and societies as a whole. In short, central banks recognise that sticking to a wholesale CBDC risks ceding control of money and financial stability to some combination of Stablecoins (such as Facebook’s Libra) and crypto-currencies.

Hybrid retail-wholesale CBDCs remain a possibility

Hybrid wholesale-retail CBDCs remain a theoretical possibility. The most straightforward is one in which the central bank settles netted inter-bank payments in central bank money via a CBDC-based RTGS while private commercial banks issue commercial bank money backed by reserves held at the central bank, rather as they do today.

In a variant of the straightforward hybrid, a CBDC could be used to consolidate private and public payments networks. Inter-bank payments would settle in central bank money in the same way as an RTGS today, but on a gross basis, without being netted through privately owned automated clearing houses (ACHS) first.

Central banks will not offer retail accounts but retain private banks to distribute CBDCs

What is now abundantly clear is that the vast majority of CBDC designs retain private bank intermediation to distribute CBDCs to households and firms. Though some central banks have considered running retail accounts, consumers expecting to open a digital wallet at their local central bank are almost certain to be disappointed.

Most central banks lack the capacity and expertise to run a retail banking business. Nor, to resurrect an early anxiety about the systemic impact of a CBDC, do central banks want to compete with private commercial banks for deposits.

If central banks competed for deposits, they would undermine the funding of private banks (or at least make it more volatile) and shrink their capacity to lend, with predictable consequences for the supply of commercial bank money and unpredictable consequences for the economy as a whole. In addition, simply because it is completely digital, a CBDC might even accelerate bank runs.

Caps on deposits and tiered rates of interest can protect private bank deposits

Two solutions to these threats have emerged. The first is to cap the amount of a CBDC that can be held by a depositor (a solution adopted by the Bahamian Sand Dollar). The second is to tier rates of interest on a CBDC to favour private commercial bank depositors.

There is no settled view as to whether these constraints on a flight of private commercial bank deposits will be effective, because the potential outcomes are intrinsically difficult to simulate, and must await real-world experience.

Other risks have since emerged too. One is the increased risk of fraud in a distributed network in which tokenised bearer assets are held in digital wallets offshore as well as onshore. Another is the risk that a central bank issues a CBDC, and no one adopts it. After all, one of the reasons to spurn a CBDC – namely, loss of privacy – is powerful.

CBDCs are programmable, so risk mitigants can be hard-coded into them

However, a CBDC does also incorporate a risk mitigant the fiat currencies of today are denied: programmability. Limits on the value of transactions can be written into the operation of a CBDC. Monitoring rules can be hard-coded into CBDC networks, allowing transactions of a certain type or value to be escalated to a regulator as suspicious.

Clearly, detailed oversight of movements in and out of digital wallets would improve the ability of central banks to manage bank runs and enable the State to confiscate money from criminals and others deemed unworthy to receive it.

It will be hard to achieve these potential benefits without impinging too much on the personal privacy of everybody. As the European Central Bank (ECB) announced recently, there will be no anonymity in a CBDC.

Cash confers anonymity, of course. That can be seen as a technological limitation of cash, rather than a design feature. Though there are versions of cash that can be scripted on a distributed digital ledger, these are not under consideration by central banks exploring the issuance of a CBDC.

Because they enhance surveillance potential, CBDCs raise privacy issues

The fact that CBDCs will not be anonymous therefore raises awkward questions about State power and civil liberty. True, privacy safeguards, as well as safeguards against financial crime and bank runs, can be programmed into a CBDC. But different jurisdictions are likely to code different levels of privacy into different CBDCs, because notions of privacy vary between countries and cultures.

Nor do concerns about privacy disappear at the point where private commercial banks take over a CBDC from the central banks. But privacy restrictions can be calibrated more exactly in a commercial context than a coercive one.

If they are concerned about privacy, consumers can use Stablecoins (or even uncollateralised crypto-currencies) rather than the CBDC. They are also freer to choose what they wish to keep private, and from whom, especially if – in some future state – they take ownership of their own data and can decide who sees or needs to see what.

Private commercial banks can programme customer services into a CBDC

Even in the present state consumers will welcome programmability at the application layer, where private commercial banks can be expected to operate.
Smart contracts could automate conditional contractual obligations. Defaulting to cash in a corporate takeover, or always selling entitlements in a rights issue, for example, could be programmed into CBDC networks by banks on behalf of customers.

CBDCs could also be designed to facilitate micro-payments. It is not a large leap of technology (or imagination) from paying for an Uber, or splitting the restaurant bill, or buying insurance for the time the car is driven only, to an Internet of Things (IoT) in which the refrigerator or the heating oil tank order replenishments themselves, or the Value Added Tax (VAT) the consumer pays goes straight from the point of sale (PoS) to Her Majesty’s Revenue and Customs (HMRC).

CBDCs could shift payments from an account-based system to peer-to-peer payments

Most importantly of all, a CBDC represents a fundamental shift in the nature of digital payment. It moves payment from an account-based structure, in which banks and financial market infrastructures exist to provide the connectivity between accounts to make payments, to a structure in which digital money is much more like cash: a bearer asset which can be used to transfer value directly between digital wallets. Apps to facilitate this can be engineered and hosted by non-banks as well as banks.

This is a genuinely exciting possibility, in terms of competition (which will lower costs) and innovation (which will enhance services) in payments. Although payments have proved a famously fecund source of unicorns ever since PayPal went public way back in 2002, innovation has tended to be parasitic on existing infrastructure rather than fundamentally transformative. A CBDC creates the possibility of bypassing existing infrastructure altogether.

Central banks understand this and welcome it. Which is why non-bank payment service providers (PSPS) are almost certain to be able to open CBDC settlement accounts at central banks. After all, denying innovators access to a CBDC network would blunt the impact of a CBDC in terms of fostering competition and offering consumers a different experience. In China, for example, the vast majority of consumer payments are already being handled by non-bank payments providers such as WeChat and AliPay.

It was precisely to stimulate innovation and competition that the Bank of England widened access to its RTGS system to encompass non-bank PSPs, so they are not reliant on bank intermediation, in 2018. In its CBDC experiment, the People’s Bank of China (PBOC) simply treats non-bank PSPs like banks, insisting they hold reserves at the central bank.

CBDCs can boost growth by cutting transactions costs if the infrastructure is in place

This is the real prize from CBDCs: a reduction in the cost of making payments through competition and innovation. In principle, an economy which is spending less on payments will grow faster because transaction costs will be lower. International trade will in theory be boosted by CBDCs as well, because foreign exchange costs will be lower and payments made faster. CBDCs will free up liquidity currently trapped in inefficient payments processes.

But realising those gains still require an infrastructure for making payments both domestically and across national borders and currency zones. At the moment, payments infrastructures – both RTGS systems and ACHs – are domestic.

Efforts to link RTGS systems and ACHs across borders have foundered on the need for liquidity for large cross-currency payments and (in the absence of digital identities) Know Your Client (KYC), Anti Money Laundering (AML), Countering the Financing of Terrorism (CFT) and sanctions screening checks.
Even with CBDCs being exchanged, all this work and liquidity would still have to be completed and paid for, either by users paying a flat or ad valorem fee or by banks and infrastructure providers collecting some or all of the return on the CBDC.

Worse, since CBDCs are being designed to settle transactions 24 hours a day, seven days a week, 365 days a year, they demand a more capacious and resilient infrastructure than current RTGS or private settlement systems. Something close to such an infrastructure can be found in domestic markets, but not across borders.

Even if it did exist, round-the-clock settlement activity of this kind would create a paradoxical type of operational risk, but nevertheless one that worries central banks: not a halt in payments creating a crisis of confidence but an unstoppable torrent of payments that creates a positive feedback mechanism, exacerbating a crisis.

Unlike the financial crisis of 2008, when central banks could look forward to a halt in transactional activity overnight and at weekends, there will be no pauses in which to work out what is really going on in the global financial system.

The main source of cost in cross-border payments is correspondent banking

There are nevertheless expectations that CBDCs will make payments across national borders cheaper and more transparent. Realising that expectation requires a major change in how cross-border payments are made. Today, cross-border payments cost more than domestic payments because the vast majority are handled by correspondent banks.

The correspondent banking system relies on extended chains of fee-deducting banks active in and around the foreign exchange (FX) market. Their trick is to prevent money crossing borders at all. Instead, arrangements between correspondent banks turn a single cross-border payment into two domestic payments (and sometimes more, if the banks of the buyer and the seller have to go through third party banks in their domestic market).

Digital technology is starting to democratise this activity by matching sellers and buyers of currencies. So-called “atomic” payment versus payment FX transactions are now occurring in a number of offshore locations. But this is not yet happening at anything like the scale sufficient to disturb the correspondent banking industry. In addition, as even the inhabitants of a single currency area such as the eurozone have found, correspondent banks are extremely adept at avoiding disintermediation.

One of the few things that is certain about CBDCs is that correspondent banks will stage a highly effective rearguard action capable of delaying their adaptation to a cross-border CBDC versus CBDC payments infrastructure, probably for decades.

Central banks can contribute to cutting cross-border costs by collaborating on CBDC designs

Central banks would like to cut the tax correspondent banks impose on international trade, but they have another reason to act. Offshore FX transactions threaten the network (though not the monetary) sovereignty of the country that issues the currencies. So it would behove central banks to co-operate in working out how CBDCs can be exchanged more efficiently.

In October 2020, the BIS published a paper in conjunction with seven major central banks that are deeply involved in work on CBDCs that listed a set of common principles and features any domestic CBDC should share. It promised research into ways to improve cross-border payments, not least because the Group of 20 (G20) has made cheaper and faster cross-border payments a priority.

The Committee on Payments and Market Infrastructures (CPMI) of the BIS has identified CBDCs as a way of making cross-border payments in central bank money more efficient. At a minimum, domestic CBDC networks could inter-operate across national borders via common messaging standards and overlapping opening hours. At the near-maximum, CBDC systems could be integrated, so “cross-border” payments occur within a single system.

The genuinely maximal CBDC is a multi-national one. A CBDC eligible to make payments in multiple jurisdictions could reduce the number of cross-border transactions simply by increasing the geographic span of the currency. The eurozone has made some progress in this area already, against the cunctatious resistance of the conventional banks. Its distinctly compromised monument is the Single Euro Payments Area (SEPA).

Inter-operability between national CBDCs could cut cross-border payments costs

Clearly, it does not take a CBDC to knock correspondent banks out of cross-border payments: inter-operability between or integration of existing RTGS systems would have the same effect. But CBDCs provide the opportunity and the incentive (losing control of cross-border currency movement to, say, a global Stablecoin) for central banks to collaborate on inter-operability.

In central banking circles, the hard thinking on cross-border issues is only now getting under way. It needs to encompass Stablecoins, crypto-currencies and other types of digital asset, all of which will be affected by the issuance of CBDCs.

The Organisation for Economic Co-operation and Development (OECD) is developing blockchain policy principles for its member-states, to provide general purpose guidance on inter-operability as well as governance and privacy issues to regulators supervising any type of asset issued on to a blockchain, including a CBDC.

Obstacles to CBDCs inter-operable across borders are operational, commercial, regulatory and cultural

The obstacles to the use of CBDCs across borders extend beyond the variations in the way the domestic payment systems which net payments prior to settlement in an RTGS actually operate. Thayt is just one example of a barrier to horizontal inter-operability. It can be overcome by standardising data exchanges.

But domestic payment systems are also the gateways into stacks of vertical inter-operability challenges set by how businesses and households pay today and how they would like to pay in the future, and the dozens of established and aspirational payments service providers that want to sell them solutions.

There are cultural differences between jurisdictions in how consumers like to make payments. British consumers are avid users of credit cards, for example, while continental Europeans are much less enthusiastic. There are contradictions between legal and regulatory regimes too.

Even within an area such as the eurozone, economic, financial, social, political and cultural structures vary considerably, so different countries will always have different preferences in terms of the design of a CBDC, and its regulation (or at least the regulation of the banks that handle it).

How banks would be regulated in a CBDC system, what collateral would be eligible to access central bank money and how a CBDC can be used to advance financial inclusion or stimulate the economy or make welfare payments will continue to differ between national governments, even in a single currency zone.

Designs of CBDCs will never be allowed to compromise fiscal sovereignty

If a major counterparty failed in a multi-national CBDC area, for example, it would need to be clear whether dealing with the fall-out fell to the issuer of the CBDC (which is likely to be a multi-national central bank) or a national central bank. In the eurozone today, for example, the fall-out would be handled by the ECB if it was judged to be a monetary policy issue, while emergency lending remains a purely national decision.

Hard questions such as this are the point at which monetary sovereignty shades into fiscal sovereignty, which remains a fiercely national domain. All governments in all countries are concerned about the risk of losing control of fiscal policy – their powers to tax and spend – if they become part of a single regional or international CBDC. The eurozone crisis of 2011 provided a vivid demonstration of what loss of fiscal sovereignty means in practice.

That said, the idea of a multinational CBDC to replace the US dollar as the principal international reserve and trade currency remains a live possibility. The idea was first voiced in 2019 by the then Bank of England governor Mark Carney, who proposed a Synthetic Hegemonic Currency (SHC) CBDC, backed by multiple fiat currencies. His argument rested on the increased weight (in terms of output) but limited control over the behaviour of the US dollar of emerging market economies.

Denominating a rising proportion of world trade in an SHC would, Carney argued, reduce the need of emerging economies to maintain such large foreign reserves, especially in US dollars, which artificially depresses interest rates. It would also provide a less disruptive transition to a post-US dollar world order than a direct transition to the Renminbi as the major international reserve and trade currency.

That the Chinese government seeks to replace the US dollar with the Renminbi as the major international currency is incontestable, and the relatively advanced state of the PBOC experiment with a CBDC is an aspect of that policy. The Chinese authorities have stated their intention to export their CBDC, enabling it to be used freely abroad. This is part of a clear strategic plan to displace the US dollar as the major international reserve and trading currency.

CBDCs are likely to co-exist with Stablecoins rather than displace them

An interesting question is whether CBDCs will also displace Stablecoins and (less probably) crypto-currencies. After all, the principal reason central banks are pursuing CBDCs so aggressively is that a Stablecoin (Libra) threatened them with loss of control of monetary policy. In October 2020, the Financial Stability Board (FSB) published ten Recommendations urging central banks to co-operate in the regulation of Stablecoins.

The functionality of a CBDC (that is to say, the features programmed into it) can determine whether Stablecoins survive. A Stablecoin which offers useful additional functionality unavailable from a CBDC, for example, is likely to survive, even if it is costlier to use.

A future in which programmable Stablecoins are meshed with programmable CBDCs, to provide consumers with additional services underpinned by the ultimate authority of the central bank, is a viable vision of constructive coexistence.

However, central banks are now concerned that adoption of a CBDC by consumers might inadvertently legitimise a range of unregulated or loosely regulated digital assets, creating a shadow banking system of the kind they believe played a major role in the financial crisis of 2007-08.

The current DeFi token boom, which is characterised by leverage and yield-chasing of the kind that occurred before 2007, is being viewed by central banks as a precursor of what might go wrong.

CBDCs entail technology and project management risks for central banks

But central banks are concerned about project management risk, as well as systemic risk. The BIS has reported that blockchain is the commonest technological foundation for the CBDCs currently in train. No CBDC is expected to be available on a public blockchain; they will all issue CBDCs on to private, permissioned blockchains.

This offers benefits in terms of governance (regulators other than the central banks can be nodes on the network alongside private commercial banks) and resilience (there will be no single point of failure) but blockchain processing speeds are still an issue.

Even enterprise blockchains are currently managing no more than 5-6,000 transactions per second. That is unlikely to be sufficient for a major economy.
The demands created by retail CBDCs – safe custody, data management and protection, digital identity, supporting offline transactions and building connections between retail and wholesale systems – are certainly pushing blockchain technologies to the limits of their capabilities.

But the same demands are also inspiring software engineers to find solutions because CBDCs are such an attractive (even “golden”) use case for blockchain technology.

The PBOC, which is aiming at 300,000 transactions per second, is building its CBDC on a centralised database platform, largely because of the processing speed limitations of blockchain.

Another CBDC that is well-advanced, the e-Krona, is being built on a variant of blockchain technology that bypasses the limitations of classic blockchain technology. One technological possibility is a hybrid of conventional and blockchain technologies.

However, there is a danger, if every central bank builds its own technology platform for its CBDC, that protocols proliferate and inter-operability between CBDCs become difficult or even impossible. That said, few central banks have the skills to build their own platforms and most can be expected to purchase commercial enterprise blockchain technologies.

This will also be cheaper, given that commercial vendors will have invested in the features necessary to support a CBDC, and can spread the cost across several. Central bank pilot programmes so far support this expectation.

The impact of a CBDC will be felt throughout economies and societies

But the complexities of the technology are not the only challenge a CBDC presents to a central bank. None is proceeding rapidly with the project, because shifting to a 24/7/365 CBDC system is not just a change of technology but impacts payment methods throughout an economy, and affects all consumers, households and firms. Indeed, all central banks exploring CBDCs are expecting to have to launch public education campaigns to wean consumers off existing methods of payment.

Given the centrality of payments to the economy, central banks understandably insist that all risks are assessed, tested and mitigated before a CBDC is launched. Whatever its benefits in terms of innovation and competition, the operational transition risk of a retail CBDC is real, and much greater than that of a wholesale CBDC. Which is why even the CBDC programme of the PBOC, which is well advanced and being pursued aggressively, is not expected to be in full production before 2022.

Central banks are proceeding cautiously, conscious of the significance of their choices

For the central banks, the principal concern is that they make poor choices, and end up inadvertently putting the control of money in the hands of third parties, undermining their own reputation and putting financial stability at risk.

It follows that, from a central bank perspective, the operational framework of a CBDC must afford the central bank at least as much control as it presently exerts through the banking system and the payments infrastructure. Once the first CBDCs are issued, and the consequences of the choice made by the pioneers are plain, central banks will doubtless recalibrate their own designs.

Clearly, the maintenance of a stable, trustworthy currency matters to businesses and households too. But they will naturally be focused on the benefits rather than the risks, though these are more than usually hard to predict in the case of a CBDC.

Unlike most financial innovations, which only build on existing infrastructures or even add another layer to an existing process, a CBDC represents a change in the foundations of the financial system.

Foundational changes tend to reverberate widely. Expectations of direct payments to welfare recipients, furloughed workers and victims of disasters, round-the-clock “atomic” settlement eliminating Herstatt Risk in the FX markets, IoT devices making payments, smart contracts fulfilling contractual obligations, and delivery of security tokens versus payment in central bank money on blockchain networks are already running high.

CBDCs need a broadband infrastructure as well as a payments infrastructure

All such benefits do of course depend on consumers having access to computers and the Internet and/or mobile telephones and mobile telephone networks. Although CBDCs are often touted as the answer to exclusion from the financial system, precisely because they can be paid into digital wallets as well as bank accounts, their reach is still constrained by technology.

In China, for example, the Agricultural Bank of China recently announced it was upgrading its Automated Teller Machines (ATMs) to accommodate the CBDC. Such machines could dispense to those without access to broadband or mobile telephony a token with a chip charged with CBDC, indicating the failed experiments with electronic cash of the 1990s (such as Mondex) may yet find their use-case.

CBDCs offer banks threatened with disintermediation a way to reintermediate themselves

A revivification of the division of labour between bank-controlled private networks for low value payments (the automated clearing houses, or ACHs, of today) and central bank RTGS systems (which are reserved, on the whole, for high value payments) is another potential outcome. Fnality International is already exploring this possibility.

But the most intriguing possibility of all is a shift in the balance of power in payments from PSPs and FinTechs back to private commercial banks. It will be interesting to see if the banks can translate into genuine innovation the potentially life-saving opportunity given to them by their role in the distribution of a CBDC.

Questions to be addressed at the next CBDC discussion
1. Will a wallet-based system replace an account-based system?
2. How can privacy best concerns be addressed?
3. What will the impact of CBDCs be on Stablecoins, crypto-currencies and digital assets more generally?
4. What can be programmed into a CBDC by (a) central banks and (b) private commercial banks?
5. What are the use-cases for a CBDC?
6. How can CBDCs best made inter-operable across national borders?
7. What opportunities do CBDCS create for banks to reinvent themselves?

1. Bank for International Settlements, Central bank digital currencies: foundational principles and core features, Report #1 from a group of central banks, 9 October 2020.2. Mark Carney, The growing challenges for monetary policy in the current international monetary and financial system, Jackson Hole Symposium, 23 August 2019.
3. Financial Stability Board (FSB), Regulation, Supervision and Oversight of “Global Stablecoin” Arrangements: Final Report and High-Level Recommendations, 13 October 2020.

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