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What is money? Cash versus central bank digital currencies
Morten L. BechHead of Secretariat,
Any views expressed in this presentation are those of the presenter and not necessarily those of the BIS
Cash on TrialSUERF – Frankfurt, 20 May 2019
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Amicus curiae
An amicus curiae (literally, "friend of the court") is someone who is not a party to a case and may or may not have been solicited by a party and who assists a court by offering information, expertise, or insight that has a bearing on the issues in the case
Pronunciation: Ah-MEEK-us K-YUR-ee-ay US and UK legal systems
10%
85%
0%
20%
40%
60%
80%
100%
Amicus curiae briefs in US Supreme Court cases
1900-50 2000s
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Game plan
What is money? The functions of money A taxonomy
How are payments changing? Electronic on the rise but cash still rules
When can I get my hands on central bank digital currency? A survey
Cash, cashless or less cash society? It is hard to predict, especially about the future
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What is money?
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Evolution of money over time
Money served an important function in human civilisation - has existed for 1000s of years: Three functions: i) unit of account, ii) means of payment and iii) store of value Money is memory …
Digital
moneyElectronic
moneyCoins and
notesPrimitive money
Digital money
2.0?
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Central bank issuedElectronic
Widelyaccessible Peer-to-peer
The money flower
Bech and Garratt (2017)Central bank cryptocurrenciesBIS Quarterly Review, Sep
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Central bank issuedElectronic
Widelyaccessible Peer-to-peer
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Central bank issuedElectronic
Widelyaccessible Peer-to-peer
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Central bank issuedElectronic
Widelyaccessible Peer-to-peer
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Central bank issuedElectronic
Widelyaccessible Peer-to-peer
Two digital coins!
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Central bank issuedElectronic
Widelyaccessible Peer-to-peer
= CBDC
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Central bank issuedElectronic
Widelyaccessible Peer-to-peer
CBCC (retail)
CBCC (wholesale)
= CBDC
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How are payments are changing?
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Swipe and gone
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Ask banks - What financial products & services are:
Most affected by technological developments now?
Most affected by tech developments over the next 5y?
Seeing the greatest competition?
Geneva Survey on the World Economy (forthcoming 2019)
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Ask banks - What financial products & services are:
Most affected by technological developments now?
Most affected by tech developments over the next 5y?
Seeing the greatest competition?
Geneva Survey on the World Economy (forthcoming 2019)
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Ask banks - What financial products & services are:
Most affected by technological developments now?
Most affected by tech developments over the next 5y?
Seeing the greatest competition?
Geneva Survey on the World Economy (forthcoming 2019)
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Ask banks - What financial products & services are:
Most affected by technological developments now?
Most affected by tech developments over the next 5y?
Seeing the greatest competition?
Geneva Survey on the World Economy (forthcoming 2019)
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When can I get my hands on central bank digital currency?
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Central bank digital currency
Central bank CBDC work
Share of respondents Graph 3
Engagement in CBDC work Focus of work1
1 Share of respondents conducting work on CBDCs, 2018 survey.
Source: Central bank survey on CBDCs.
BIS paper 101
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Likelihood of CBDC
Likelihood of issuing a CBDC in the short and medium term1
Share of respondents Graph 8
General-purpose CBDC Wholesale CBDC
1 Short term: 1–3 years and medium term: 1–6 years.
Source: Central bank survey on CBDCs.
BIS paper 101
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Cash, cashless or less cash society?
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Key features of cash
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Anonymity and privacy
Anonymous: No one knows who you are
Privacy: What you bought and for what
amount are unknown Societal preferences?
Regulation Innovations
More privacy
Less privacy
Moreanonymity
Lessanonymity
Steemit.com
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What is plan B?
Cashless? Maybe - but likely not completely paper money less
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CPMI-related resources
Central bank digital currencies (2018): www.bis.org/cpmi/publ/d174.pdf
Digital currencies (2015): www.bis.org/cpmi/publ/d137.pdf
Distributed ledger technology in payment, clearing and settlement (2017): www.bis.org/cpmi/publ/d157.pdf
Principles for financial market infrastructures (2012): www.bis.org/cpmi/publ/d101a.pdf
Proceeding with caution - a survey on central bank digital currency (2019): www.bis.org/publ/bppdf/bispap101.htm
The role of central bank money in payment systems (2003): www.bis.org/cpmi/publ/d55.pdf
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