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Central Bank Digital CurrenciesCentral Bank Digital CurrenciesCopyright © 2019 Accenture. All rights reserved.

CENTRAL BANK DIGITAL CURRENCIES

Fintech Inn 2019

Vilnius, 26 November 2019

International dimension of central bank money

Dr Ousmène Jacques Mandeng, Senior Advisor, Global Blockchain Technology, Accenture


ACCENTURE

Central Bank Digital CurrenciesCopyright © 2019 Accenture. All rights reserved.

ACCENTURE BLOCKCHAIN OVERVIEW

3

>150Clients engaged globally on blockchain

4 x Many

>30Accenture Innovation

Centers/Labs

>1,800People trained live on

blockchain

~340Credentials in the last two years

>60Business-centric assets

Double DigitMarket share serviced by Accenture

3 Focal AreasFS Infrastructure, Supply Chain, and Identity

>20Accenture supported consortia

5Industry organization

board seats (EEA,GBBC,

Hyperledger, ID2020,GAHI)

>15Strategic

alliances/ startup partnerships

>100Patent applications/

granted patents


INTERNATIONAL CURRENCIES


International transactions are dependent on national currencies to serve as international medium of exchangeThe dollar is the dominant international currency and the U.S. Federal Reserve the only institution able to create net international liquidity but the dollar is a national currency to serve national policy objectives


6

• Central bank foreign exchange reserves are about US$11.5 trillion (14 percent of world GDP)

• Dollar represents about two third of total foreign exchange reserves

• Euro has remained a distant second with a share of one fifth

INTERNATIONAL LIQUIDITY

15

25

35

45

55

65

8,000

9,000

10,000

11,000

12,000

13,00020

10

2011

2012

2013

2014

2015

2016

2017

2018

2019

World U.S. dollar (right axis) Euro (right axis)

Share in total foreign exchange reserves, percent

Source: IMF.

US$ billion, all currencies


7

• Role of dollar due to financial and international trade transactions

• Sustained demand for U.S. securities as proxy for dollar holdings

• Demand for dollar introduces a bias in the distribution of financial resources and distorts relative prices

INTERNATIONAL PORTFOLIO INVESTMENTS

0

10

20

30

40

50

Ba

ng

lad

esh

Chin

a

Ind

ia

Ind

on

esia

Ko

rea

Ma

laysia

Mo

ng

olia

Pa

kis

tan

Ph

ilip

pin

es

Th

aila

nd

Holdings of U.S. portfolio securities

Exports and imports with U.S.

Source: IMF. June 2018. Excluding securities held as central bank foreign exchange reserves.

Percent of total, 2018


Need for greater diversification in international currencies to maintain various pools of international liquidityNew currency functionalities may help tilt the balance in the relative attractiveness of currencies and help overcome the infrastructure and network advantages of the incumbentsFintech may be the new success factor for currencies


CBDC


CBDC is tokenised central bank money to serve as a medium of settlement on token-based financial market infrastructures


CENTRAL BANK MONEY FORMATS

Currency in circulation held by non-bank public for retail

settlement

Paper

Interbank market clearing balances held by banks for

wholesale settlement

Reserves

Retail and wholesale settlement

Tokens

11


RECENT CBDC DEVELOPMENTS

Oct. 2018

Jul. 2018

May 2019

Switzerland

Swiss Exchange (SIX) announces development of fully integrated blockchain-enabled trading, settlement and custody platform.

Canada

Bank of Canada, Payments Canada and Toronto Stock Exchange (TMX) show that DLT can perform securities settlement against CBDC.

Sweden

Riksbank initiates procurement of suppliers to develop proposals for an e-krona.

United States

Depositary Trust and Clearing Corporation (DTCC) showed that DLT-enabled systems can process peak U.S. equities trading volumes.

Canada and Singapore

Bank of Canada and Monetary Authority of Singapore perform cross-border DLT-based CBDC exchange.

12

Jun. 2019

China

People’s Bank of China (PBoC) announces that it is ‘almost’ ready to launch a CBDC.

Aug. 2019


CBDC PROJECTSMonetary Authority of Singapore and Bank of Canada Jasper - Ubin project is a collaboration exploring cross-border and cross-currency transactions across different DLT platforms. The project builds on experience from separate projects experimenting with DLT for domestic interbank settlements.

The United Arab Emirates Central Bank and the Saudi Arabian Monetary Authority – Launching project ‘Aber’. Aber will be used in financial settlements between the two countries.

Central Bank of The Bahamas – Seeks to provide access to digital payment capabilities while simultaneously reducing cash transactions and cutting delivery costs.

The Eastern Caribbean Central Bank – Aims to issue world’s first blockchain-based digital currency. Pilot will involve a securely minted and issued digital version of the EC dollar.

South African Reserve Bank – Exploring CBDC for domestic interbank payment and settlement efficiency with project Khokha.

Interest Research Experimentation Implementation

SELECTED

CEN

TRA

L BA

NK

EXAM

PLES

PAVING THE PATH TO PRODUCTION

Central banks are researching, experimenting and implementing CBDC solutions globally

13

According to the World Economic Forum more than 40 central banks worldwide are experimenting with blockchain technology


FOUR CRITICAL CBDC THEMES

14

Payment system diversification to increase

resilience, access and autonomy

1

Enable end-to-end settlement for token-

based financial market infrastructures

Making central bank money available off-shore for money settlement and

as substitute for foreign exchange reserve assets

Co-existence of private and official currencies

amid new scope of forming optimum

currency areas

2 3 4Diversification Settlement Access Co-Existence


CURRENCY SUCCESS FACTORS

15

Intrinsic value Credibility of issuer Functionality

time


KEY CONTACTSJohn VelissariosManaging DirectorGlobal Blockchain Technology & Security [email protected] Kingdom

Dr Ousmène Jacques MandengSenior AdvisorGlobal Blockchain [email protected] Kingdom


END

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