Digital Money 2025
Is It Game Over for Fiat Currency Finance?
Panels & Key Discussion Topics
Can fiat currencies survive?
Since their inception in August 1971 fiat currencies have become synonymous with persistent inflation, the accumulation of debt by the public and the private sectors, periodic financial crashes followed by bail-outs of banks and other financial institutions, occasional confiscations of assets, quantitative easings and extended periods of low and even negative rates of interest. Are there benefits that outweigh these costs?
Central bank digital currencies (CBDCs) would put fiat currencies on-chain. Will this lead to outcomes different from the historical experience of fiat currencies off-chain?
The CBDCs that have been launched have not proved popular with merchants or consumers. Does this owe anything to previous experience with off-chain fiat currencies?
Would a non-fiat CBDC (e.g., one backed by a scarce asset or even government bonds) have a higher chance of adoption?
Which of the two main forms of digital money are traditional banks incentivised to issue: Stablecoins or tokenised deposits?
Some say an opportunity was missed after the great financial crisis of 2007-09 to transform or replace fiat currencies. If a similar opportunity arose, what path should any transition to a new system follow?
PANEL 1
10:30 to 11:30
Can cryptocurrency displace fiat currency?
Does Bitcoin (or any other form of digital money) offer a viable alternative design to fiat currencies?
If the viable design as a replacement for fiat currencies is not Bitcoin, what would be a viable design (e.g., a form of digital money backed a scarce commodity such as gold or government bonds or a tax-raising government as issuer)?
Bitcoin lacks the speed and capacity to be useful as money in day-to-day consumer transactions. Could it instead play a role similar to central bank money in settling netted transactions handled by other digital apps (akin to the role of an RTGSs in the current commercial bank/central bank money system)?
The Czech central bank floated the idea of adding Bitcoin to its currency reserves. Though other central banks (the ECB and the SNB) have rejected the idea, will Bitcoin reserves remain unthinkable?
Bitcoin competes successfully with weaker fiat currencies (such as those of Argentina, South Africa and Nigeria). Might weak fiat currencies be the first to be displaced by a cryptocurrency?
The Trump administration seeks to cancel work on a US dollar CBDC, liberalise the regulation of cryptocurrencies, promote Stablecoins and add some cryptocurrencies to central bank reserves. Do these measures strengthen or weaken the US dollar as the world’s principal fiat currency reserve.
PANEL 2
11:30 to 12:30
Do money, payments and credit need banks?
Bitcoin was designed as a peer-to-peer payments system which does not need banks, but has survived so far as an instrument for (a) speculation and (b) self-custodied savings. Is it capable of developing into a payments and savings service alternative to banks?
Does the Bitcoin model imply the end of commercial bank money (bank deposits, created by fractional reserve banks making loans)?
Are Stablecoins and tokenised money market funds pioneering the future of money (uncapped, high yield, non-bank deposits) or injecting the past of money (bank credit-fuelled arbitrage and carry trading) into the cryptocurrency markets?
Might (tokenised?) money market funds replace banks as providers of retail demand deposit, payment and borrowing services (as proposed by Larry Kotlikoff in his Limited Purpose Banking idea of 2010)?
Non-banks have already taken significant market share from banks in payments for consumers and corporates domestically and across currencies and borders. But can they operate now or in the future without banks or banking market infrastructures?
Can programmable digital money out-compete conventional fiat currency service enhancements such as “instant” payments, account-to-account payments, embedded finance and open banking?
PANEL 3
13:30 to 14:30
Who will control the digital money infrastructure?
The existing infrastructure is the product of telecommunications rather than digital technology, necessitating the updating of ledgers on proprietary systems via data exchanges between counterparts and their agents across messaging utilities such as SWIFT and settlement via centralised utilities such as ACHs, RTGSs and CLS. Are common platforms (such as the Regulated Liability Network or Partior) developing into viable alternatives or are they a means of preserving the status quo?
Bitcoin comes with a decentralised network infrastructure that has no need of fiat currency money transfer payment and clearing systems. Can it (or something like it) ever be strong enough to make fiat currency market infrastructures redundant? )
Stablecoins support multiple blockchains, permitting near-real time transfers between digital wallets without bank intermediation, across as well as within borders. Are they a short-term expedient or a long-term solution?
The card networks are trying to keep abreast of developments in digital money, including providing distribution infrastructure for Stablecoins. Are they pursuing a viable long-term strategy?
What incentives do banks have to invest in the infrastructure necessary to support CBDCs?
Making cross-border payments faster, cheaper, more transparent and more accessible is a priority of international financial market regulators. Are initiatives such as Project mBridge and Project Agora too backwards-compatible to provide durable solutions?
PANEL 4
14:30 to 15:30
Can digital money boost economic growth?
In March 2024 BCG estimated that, if introduced at scale, a retail CBDC plus Stablecoins and tokenised deposits could boost Hong Kong GDP by 0.5 per cent every year until 2032, generating an extra HK$160 billion in wealth, by releasing financial assets for use as collateral, improving policy targeting, increasing investment in Web 3.0 businesses and and cutting cross-currency settlement costs. Are the gains tempting enough to impel change?
Economic growth in Europe and North America has faltered since fiat currencies were introduced in the early 1970s, which some blame on the monetary policies made possible by fiat currencies, because they erode savings, increase debt, encourage consumption and lead to misallocation of investment. What sort of digital money would encourage productive investment, innovation and growth?
Is it prudent to believe that code and cryptography can make digital forms of money resistant to the same temptations as fiat currency (i.e., avoid inflation of money supply, capture by interest groups, the emergence of regulatory and infrastructural barriers to entry, and the underwriting of risks by central banks)?
If digital forms of money can be made less prone to inflation, they should in principle weaken the case for debt and strengthen the case for equity financing. What impact might digital money have on the securities markets?
Would a Digital Money system based on 100 per cent reserving or “narrow” banking need commercial banks as allocators, managers and traders of credit risk (and central banks as the final underwriters of commercial bank risk)?
In the long run, is it the destiny of Digital Money to embrace the status quo or replace it?
PANEL 5
16:30 to 17:30
