CASH MANAGEMENT: MACRO/RESEARCH
with several major central banks around the world as they review plans to launch new digital currencies, dubbed CBDCs, to offer their citizens a new way to pay. Last year, we created a test platform for these banks to use these currencies in a simulated environment.”13
Bitcoin’s pioneering of blockchain, or distributed ledger technology (DLT), for the currency’s creation, distribution, trading and storage has also encouraged members of the US tech quintet of Facebook, Amazon, Apple, Netflix and Google (aka FAANG) to work on developing their own cryptocurrencies. As Katharina Paust- Bokrezion, Head of Payments Policy in Deutsche Bank’s Political Affairs team, observes, there are a number of incentives. “The use cases for the industry and society are diverse and there are key benefits for money on a DLT compared to today’s payment landscape,” she says. “Payments today are largely digital, not just since the introduction of cryptocurrencies by FAANG. But the benefits of cryptocurrencies mainly derive from the programmability of the money itself and their usage in a cross- border context. A future-proof regulatory framework is a key basis to institutionalise DLT-based payment use cases.”
To date, the most high-profile FAANG initiative has been Facebook’s June 2019 announcement of plans to launch its global digital currency by mid-2020. Originally named Libra, the initiative quickly encountered strong opposition from G7 leaders, alarmed by the absence of supervision and regulation in the proposal.14 The launch date was delayed (to “early 2021” according to reports, but this was still unconfirmed at the end of Q1) and scaled back in scope to a digital coin (now rechristened Diem) backed by the dollar, with other currencies to be added at a later date.
Amazon, having launched its first UK contactless grocery store in London in March 2021, is also working on a digital currency.15
The group’s Digital and
Emerging Payments division has revealed it is developing a system for enabling customers in emerging markets to “convert their cash into digital currency”.
So what will the future bring? “Capital markets are very excited about tokenised assets and CBDCs beyond just cryptocurrencies,” says Samar Sen, Global Head of Digital Products at Deutsche Bank Securities Services. “But these types of
Visit us at
flow.db.com
Figure 2: Key design features of central bank money
Traditional paper money issuance Two-tier issuance
Account Submit reserve PBOC Issue money Central bank issues money through banks
DC/EP issuance Two-tier issuance
Account Submit reserve PBOC Issue DC/EP Central bank issues DC/EP through banks
DC/EP issuance Single-tier issuance
Account Deposit PBOC Central bank issues DC/EP directly to users Source: Deutsche Bank
digital assets are still nascent and the ecosystem requires more maturity.”
Over the next five years, Sen expects some cryptocurrencies to become standard allocations in investor portfolios, while many others are as likely to fail. CBDCs “will start to gain traction, along with some approved stablecoins for use in settlements, payments and remittances,” he predicts.
And will bitcoin endure? While it could still establish a long-term role for itself, some of the more ambitious claims for its future seem exaggerated, to say the least.
Sources 1
Distribute DC/EP Users Bank Deposit Distribute DC/EP Users Bank Deposit Distribute paper money Users
See
https://reut.rs/3r3ikc2 at
reuters.com
2 See
https://bit.ly/3qZViD5 at
atlanticcouncil.org 3 See
https://bit.ly/38TGaR8 at
ledgerinsights.com 4 See
https://bit.ly/33Cv2W3 at
labnews.com 5 See
https://bit.ly/3qZVwKr at
ecb.europa.eu 6 See
https://bit.ly/38UhqIK at
forbes.com
7 See
https://bit.ly/33EHzbA at
bankofengland.co.uk 8 See
https://bit.ly/3txh9TV at
ledgerinsights.com 9 See
https://bit.ly/2OKy9r2 at
euromoney.com 10 See
https://bit.ly/3bZ0CCo at
flow.db.com 11 See
https://reut.rs/3s0srQg at
reuters.com 12 See
https://on.ft.com/2P0hHTj at
ft.com
13 See
https://mstr.cd/3vCfPRu at
mastercard.com 14 See
https://bit.ly/3cDvYxe at
forbes.com 15 See
https://bit.ly/3ePBzDy at
techradar.com
55
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94
