Bank for International Settlements general manager Agustín Carstens spoke at the Singapore FinTech Festival on February 22 and described the digital financial infrastructure that he believes will meet the needs of central banks. He calls the infrastructure a “single ledger.”
Carstens compared the theoretical unification book with a smartphone, saying both can work seamlessly with various components. Unlike smartphones, the unified ledger will have an open architecture, but will share programming capabilities and compatibility, which will open and integrate smart contracts. There are more than 2 million apps available for smartphone users, Carstens noted. He said:
“The integrated ledger is a digital infrastructure with the potential to integrate the monetary system with other registries of real and financial claims.”
A unified ledger would not have to be decentralized or permissionless, Carstens said, but could accommodate a variety of projects that “use money as a means of payment and settlement” where the central bank plays a large role in the governance of the ledger and the consumer-facing sector in private hands. .
What is our main validation #CBDC design! Examining the BIS paper makes a case for a #DLT based on the CBDC where Central Bank Money, #Tokenized Savings and More #stablecoins coexist in the general cash book with # ecosystem and # rules framework #sandbox why? https://t.co/yR1WCzzYU7
— EMTECH (@emtech_inc) February 22, 2023
Central bank digital currencies and token deposits could exist in a “segregated” part of the ledger, with smart contracts to facilitate interaction, Carstens said. The ledger can be used for everything from micropayments in the Internet of Things to escrow in real estate transactions.
Related: BIS to start stablecoin monitoring project and focus on CBDC experiments
Carstens took the opportunity to express his current thoughts on stablecoins. He had this to say about stablecoin supporters:
“But what this view overlooks is that what sustains fiat money is not the application of a novel technology but the entire institutional arrangement and social convention behind it.”
They also run the risk of depegging, he said. Stablecoins were developed because they can technically do things other forms of money cannot. The central bank should take on that role.
Carstens also raised hackles from the crypto community February 22 with his blunt assessment of cryptocurrency success.