I keep trying to tell myself that, just because you don’t see much happening when you look at nature, it doesn’t mean things are not actually happening.
If you trust the evidence of your power of observation during any given unit of time, the flower doesn’t bloom. Tectonic plates don’t move and continental shelf erosion is not a thing.
Only it’s all happening.
Just not in a way that makes it a good show.
Why am I saying this?
Because I am trying to cheer myself up, to be honest.
Because things are not moving fast enough for my liking, and yet they are moving.
It was Sibos last week and it was my favourite week of the year.
Sod Christmas. This is it. My favourite thing.
And this year it was remote and that makes me sad. And yet people came together. As always. Trying to keep things moving forwards, as always. And we need to keep on keeping on. As always. And ask ourselves, “is this enough?”. As always.
So on Sibos last Monday I attended a panel hosted by Sibos Academy on defining central bank digital currencies and the writers and academics on the panel set the bar high.
This is not a new concept, they told us.
And the conversation is (thankfully) no longer about the tech but about what we are trying to do. About the mechanics of balancing the nuance between privacy and anonymity and what it all means in a digital world. About the boundaries of the role of the central bank and who needs an account with them, who solutions are for? Are we looking at direct issuance by central banks and their eventual direct participation in retail payments? Are we looking at changing the current shape of the world, intermediaries and institutions creating a space at the table for individuals?
Are we talking about usefulness, possibility and changing economics?
Or are we talking about financials, utilities and infrastructure ownership?
Is moving to one ledger (distributed or not) revolutionary?
Is this about how we do things or about the things we do today and the things we may do tomorrow?
Don’t hold your breath. The academics didn’t agree.
But the debate was interesting and the possible answers seem to hinge on three things, access to data and the value that can bring; the possibilities opening up through the existence of programmable currencies ; and the impact this could have on monetary sovereignty, especially as a re-balancing force, set against the “dollarisation” of the global economy.
Cool stuff, no?
So it was with immense curiosity that I tuned in for the next day’s panel on central bank digital currencies asking if they are “ready for a global take-off”?
I had the questions from the day before. I had the analysis. I brought the popcorn.
I was all ready to go.
But not much happened.
Five men prevaricating and going at great lengths to not say much but not say less than the other guy.
They represented national central banks and consortia.
They were the people doing the doing.
Only they were either not doing much, or not telling us about it.
The new world looks a lot like the old, from where I am sitting right now.
The language was a true thesaurus in hedging and non-committal vagueness.
A digital bearer instrument is technically possible, they told us. Thanks. We knew that.
We run pilots, they said. Still.
We see some developments that could lead us to believe… we are working hard to prepare for the possibility…. We design and support the context for growing policies…
Oh the caveats.
So this is useful for cross-border payments and international security settlements, they say. Right. We knew that.
And then it comes.
We ran analyses. We could not see how this new tech can improve our situation. But we felt the train was leaving the station and we didn’t want to miss out on this journey.
What journey? To where?
Not sure but don’t want to miss out.
Government level FOMO is a beautiful thing.
We are not sure there is a need for a digital bearer asset, they said.
Stand down. No change there.
So what’s the deal?
Step up. Be prepared. Improve capacity.
There is value in the token, we are just not sure what it is yet. We want to be ready when this happens. But we don’t want to cause unnecessary disruption and financial instability, they said. And rightly so, no objections there.
But disruption and instability are not synonyms.
And what I got from this is a strong sense of… meh.
Are central bank digital currencies ready for a global take off?
If you are imagining Cape Canaveral type scenes of dramatic, imminent, transformative, explosive beginnings… don’t.
This is not going anywhere fast.
If it is going anywhere at all, it is not yet specific and it is most definitely not speedy.
Programmable money is cool.
Value generating, data-empowered, access-minded infrastructure transformation is even cooler.
But, if our academics are there with their thinking, our central bankers aren’t. And neither group has a definitive answer as to what we should really be driving for.
If the art of the possible is being explored, the art of the valuable remains elusive.
We are getting programmable currencies one day, make no mistake. But like soil erosion and continental drift, it will happen in its own time with little spectacle for now.
All I’m saying is, don’t dismiss it. But don’t rush for the popcorn.
By Leda Glyptis