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Agustín Carstens, General Manager of the Bank for International Settlements, spoke at the Singapore Fintech Festival on February 22nd, explaining the digital financial infrastructure he believes is best suited for the needs of central banks. He called the infrastructure the “Unified Ledger”.
Carstens compared Both the theoretical unified ledger and smartphones work seamlessly with various components, he said. However, unlike smartphones, the unified ledger has an open architecture, exhibits programmability and configurability, and executes and bundles smart contracts. According to Carstens, he has more than 2 million smartphone apps available to his users. He said:
“A unified ledger is a digital infrastructure with the potential to combine monetary systems with other physical and financial claims registries.”
The unified ledger doesn’t have to be decentralized or permissionless, Carstens said, but it would allow the central bank to play a bigger role in governance of the ledger and accommodate a range of projects that “use money as a means of payment and settlement.” increase. The consumer sector is in the hands of individuals.
What are our major verifications #CBDC design! Check out the BIS paper, #DLT Base CBDC Central Bank Money, # tokenization Deposits, etc. #stablecoins coexist on a common ledger with #Ecosystem and # regulation Framework #whysandbox https://t.co/yR1WCzzYU7
— Emtech (@emtech_inc) February 22, 2023
Central bank digital currencies and tokenized deposits may exist in “divided” sections of the ledger, with smart contracts facilitating their interaction, Carstens said. Ledgers can be used for everything from micropayments in the Internet of Things to escrow in real estate transactions.
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Carstens took the opportunity to voice his current thoughts on stablecoins. He said of stablecoin proponents:
“What this view forgets, however, is that it is not the application of new technologies that sustains fiat currencies, but all the institutional arrangements and social conventions behind them.”
They also run the risk of de-pegging, he added. Stablecoins were developed because they can technically do things that other forms of currency cannot. Central banks should take over those roles.
Carstens also sparked a hack in the cryptocurrency community on Feb. 22 by candidly assessing the success of cryptocurrencies.