Digitization of financial assets promises tremendous benefits to the capital markets, such as executing fast, efficient, and secure transactions via distributed ledger technologies (DLTs). First financial institutions across the globe look for opportunities to integrate blockchain technology into their security offerings, such as blockchain-based bonds. The World Bank pioneered by issuing a new blockchain-based debt instrument and launched its bond-i already back in August 2018. Today, digital assets are already allowed by the regulator, e.g., in Germany, and will thrive over the next years.
The advantages of digital assets become particularly clear when not only the digital asset itself, but also the payment/settlement of the digital asset is observed. When digital assets are based on DLTs, not only buying and selling the bond via a DLT is possible, but also the payment of the bond - both on the same platform. This allows for instantaneous settlement of assets.
One promising way for digital assets is to settle in central bank money, via a wholesale central bank digital currency (CBDC). While the first central bank pioneered wholesale CBDCs, the Austrian Central Bank has recently conducted a research project for settling a digital asset with central bank money. In their DELPHI (Delivery vs. Payment Hybrid Initiative) project, appropriateness of blockchain technology for issuing and settling digital bonds in real time using a wholesale CBDC was explored. The Austrian Central Bank issued a wholesale CBDC that was used to pay for the digital bond. Potential deliveries of this blockchain-based project are to assess the compatibility of the current legal framework and its various amendment needs and to evaluate the applicability of this project learnings to the market needs.
The aim of this webinar is to discuss how the digital euro will support the digitization of financial assets, such as bonds. In this context, the role of public sector solutions, such as wholesale CBDCs, are explored alongside private-sector solutions.
In particular, in this webinar, we focus on addressing the following questions among others:
- How does a digital Euro support the digitization of financial assets?
- Is a digital Euro for the settlement of assets needed? Which benefits does a digital Euro provide?
- Should the digital euro be provided via a wholesale or a retail CBDC or should the private sector provide such a solution?
- What are the learnings from current projects around settling bonds with central bank money via wholesale CBDCs?
- Which role does blockchain technology play?
- Who is frontrunning wholesale CBDCs?
- When will we have a wholesale CBDC in the Euro Area?
Tony McLaughlin, Managing Director Transaction Banking at Citi Bank, will present his proposal for a tokenized regulated liabilities network as a complement to unregulated stablecoins and CBDCs.
Digital payment solutions based on distributed ledger technology (DLT) are seen as a highly disruptive force in payment ecosystems of national fiat currencies all around the world. Various institutions have increased their efforts to modernize payment infrastructures and to realize the potential efficiency gains of tokenized money. This includes central banks as the monetary institutions of the public sector but also many private stablecoin providers around the globe.
As DLT has the potential to represent multiple forms of digital value, we might go further and envision the creation of networks that tokenize regulated liabilities and regulated assets on the same chain. Such a network would be significantly different from today’s siloed financial architecture: It would embody all types of tokenized assets and money in an ‘always on’, programmable and global network — a regulated internet of value.
The aim of this webinar is to understand the “tokenization thesis” and the proposal of the regulated internet of value better. In particular, we will focus among others on these questions:
- How do current forms of money differ from cryptocurrencies?
- Which efficiency gains does tokenization of money and assets promise?
- What are the limiting factors of currently discussed forms of tokenized money?
- How can currently existing forms of money be represented on a DLT?
- Which processes need to be included in order to be able to transfer these tokenized monies?
- Which benefits will the regulated internet of value bring?
- Tony McLaughlin, Emerging Payments and Business Development, Treasury and Trade Solutions (Citi)
- Manuel Klein, Co-founder and member, Digital Euro Association (DEA)
After the summer break, the Digital Euro Association hosts a webinar on the aspect of privacy for central bank digital currencies (CBDCs). Most of the central banks around the world consider issuing a CBDC mainly as a consequence of the declining use of cash as a means of payment and to position themselves against increased competition from novel forms of private sector-issued money such as cryptocurrencies and stablecoins. In most jurisdictions, CBDC design requirements and design principles are currently being analyzed and discussed. A consultation by the European Central Bank (ECB) revealed that privacy seems to be the most important requirement for a CBDC for European citizens. Privacy of transaction data is important for ensuring the security of the data and fair pricing, and avoiding data exploitation, amongst others. Therefore, a high degree of data privacy while complying with regulations such as anti-money laundering and combating the financing of terrorism seems to be desirable for a CBDC.
In consideration of these points, in this webinar, we focus on the topic of privacy of CBDCs and, amongst others, address the following questions:
- Which use cases do CBDCs have?
- Should a CBDC provide a high degree of privacy?
- How can a CBDC be designed to enable a high degree of privacy?
- Should central banks follow a “privacy-by-design” approach?
- Can a CBDC have the privacy-preserving attributes of cash while complying with regulations?
- Which types of technology can ensure data privacy, data security, and efficiency of transactions?
- Which risks does privacy bring to CBDCs?
- Thomas Moser, Alternate Member of The Governing Board, The Swiss National Bank (SNB)
- Wolfram Seidemann, Chief Executive Officer, Giesecke+Devrient (G+D) Currency Technology GmbH
- Jonas Gross, Co-founder and Chairman, Digital Euro Association (DEA)
Private Sector and Digital Euro – The Best of Europe: ABI's Spunta Project
Digital payment solutions constitute an important strategic building block in Europe’s quest for digital competitiveness and strategic autonomy. Various European institutions have increased their efforts to modernize the payment infrastructures in Europe, including the Digital Finance Package by the European Commission and the inquiry into a digital euro by the European Central Bank (ECB). However, in particular, the private sector is at the forefront of analyzing the impact of a digital Euro, e.g., in this context, a digital euro based on distributed ledger technology (DLT).
The aim of this webinar series is to present different and well-known digital euro projects from the private sector across the whole of Europe.
In particular, in this first webinar of this webinar series, we focus on the Italian Banking Association’s (ABI) Spunta project and address the following questions:
- What is the goal and focus of ABI's digital euro initiative?
- What makes Spunta different from other projects in this field?
- How do these different approaches differ?
- Which design paradigms for a digital euro is ABI advocating?
- Which role should the private sector for the digital euro play?
- Silvia Attanasio, Head of Innovation, Italian Banking Association (ABI)
- Rita Camporeale, Head of Payment Systems, Italian Banking Association (ABI)
- Jonas Gross, Co-founder and member, Digital Euro Association (DEA)
Digital Currencies beyond Borders: International Implications
of CBDCs (June 30, 2021 | 17:00 - 18:30 CEST)
Today, cross-border payment systems are far from being frictionless and efficient. According to data by the World Bank, for cross-border payments, on average, more than 7% transaction fees are charged. Central bank digital currencies (CBDCs) have the potential to improve these international payment processes in various ways. At this point, standardization, harmonization and interoperability between domestic payment systems with possible different payment arrangements become strikingly important. A committed cooperation to build a bridge between multi-currency cross-border payments through an enhanced financial infrastructure with the design principles supporting privacy, security, fairness, efficiency, inclusivity, and legal compliance would bring about a promising solution. Additionally, international implications of CBDCs need to be further studied as CBDCs could impact exchange rates, international capital flows, and, in general, also the supremacy of specific currencies.
In particular, in this webinar, we focus on the international dimension of CBDCs and, amongst others, address the following questions:
- What is the potential of CBDCs in improving today’s cross-border payment systems?
- In which ways can the interoperability of multiple domestic CBDCs be achieved?
- What are the international implications of CBDCs?
- How could CBDCs impact worldwide capital flows and exchange rates?
- Which CBDC design principles may impact the international implications of CBDCs?
- In which ways can an interoperable multi-currency financial infrastructure be built upon the best CBDC design principles?
- Dr. Jon Frost, Senior Economist, Bank for International Settlements
- John Velissarios, Global Managing Director Blockchain and Multiparty Systems, Digital Assets, Custody & CBDC Lead, Accenture
- Dr. Taojun Xie, Senior Research Fellow, National University of Singapore
- Ashley Lannquist, Project Lead, Blockchain & Digital Currency, World Economic Forum
- Jonas Gross, Co-founder, and member, Digital Euro Association (DEA)
Find out more here.
The publication of the first Libra white paper in June 2019 was a wake-up call for central banks around the world. Many of them started to intensify their efforts regarding the issuance of an own central bank digital currency (CBDC). According to a study conducted by the Bank for International Settlements (BIS), 80% of central banks worldwide are currently working on a CBDC. First projects have been launched, such as the Sand Dollar in the Bahamas. Others, such as China, are actively testing their CBDC called DC/EP. The European Central Bank (ECB) is also looking into the possibility of introducing a CBDC for the Euro Area, the digital euro. Therefore, a digital euro might become reality in a few years.
In this webinar, we focus on the digital euro project and address the following questions:
- Do we need a digital Euro?
- If yes, why? What are the use cases of a digital Euro?
- Which role should the private sector play?
- What could be a timeline for the ECB to issue a CBDC?
- How advanced is the ECB in the development of a digital Euro? When should we expect to see a Euro-CBDC?
- What are the consequences of delayed action by the ECB?
- Alexander Bechtel, Digital Euro Association
- Lena Grale, Digital Euro Association
- Prof. Dr. Peter Bofinger, University of Würzburg
- Dr. Jürgen Schaaf, European Central Bank
- Julien Le Goc, Diem Association
- Miguel Ángel Fernández Ordóñez, former governor of the Bank of Spain
Click here to watch the Panel discussion