IGF 2021 – Day 2 – Town Hall #33 Digital currencies paving a way for digital innovations

The following are the outputs of the captioning taken during an IGF virtual intervention. Although it is largely accurate, in some cases it may be incomplete or inaccurate due to inaudible passages or transcription errors. It is posted as an aid, but should not be treated as an authoritative record.



(Video plays:)

>> We all live in a digital world. We all need it to be open and safe. We all want to trust.

>> And to be trusted.

>> We all despise control.

>> And desire freedom.

>> BOTH SPEAKERS: We are all united.

(End video.)

>> PIOTR SOBOLEWSKI: Hello, everyone. Welcome to IGF Katowice 2021. My name is Piotr Sobolewski. I'm a Senior Financial Sector Analyst at Polityka Insight, which is Poland's leading source of political analysis and business intelligence. Today, I have an opportunity to moderate a discussion panel on digital currency, or CBDC. The title of our panel discussion is Digital Currencies Paving a Way for Digital Innovations.

And the host of this panel is Visa, a global payment organization.

I'm really grateful for the opportunity to moderate a discussion with this incredible group of experts from all over the world. Let me introduce them: Catherine Gu, Global CBDC Lead at Visa; Peder Ostbye, Special Advisor in Financial Infrustracture Department for Norges Bank; and Marek Dietl, CEO of Warsaw Stock Exchange.

Our panel will be divided into two parts. In the first part I'll be asking our guests some questions. During the second part of the discussion, the audience will have some chance to direct questions to the panel. So you have some time to think about and submit your question during the panel. After the first part of our discussion, we'll address some of these questions.

If you do have a question, don't hesitate, please, to send it via chat in the Zoom platform at any time during the presentation. Katarzyna Cyrbus from Grayling will be our online moderator and she will be gathering your questions.

Before we begin, I would like to give a little bit of background on CBDC. CBDC is an abbreviation of Central Bank Digital Currency. CBDC is one of the most popular words in financial sector in 2021. CBDC is quite complicated technology. It differs from cryptocurrency and stablecoins in that it is issued by central banks and has official legal tender status. There are two types of CBDC: Wholesale, which means transaction between central banks and banking holding reserves and funds at the central bank, and the second type is retail or general proposed ones. In that case, CBDC are used as a digital equivalent of cash and would be used by all customers group.

E‑currency can be based on accounts or tokens. In the first case, this would mean creating account at central bank, for all citizens, using a given currency. And alternative would be to use tokens which are already used in blockchain banks cryptocurrencies. There's a lot of possible application for CBDC, but it is quite experimental technology.

So far, not used on a large scale in any big country.

With that in mind, I would like to address my first question to Catherine Gu, who represents Visa. Good afternoon, Catherine. Could you please tell us why are we talking about CBDC at all? What has happened in recent years to make this topic of digital currency so popular? Is it about the threats from cryptocurrency like Bitcoin or Ethereum, or is it about trying to attract customers? Or maybe other things?

>> CATHERINE GU: Good afternoon. Thank you very much for having me here and thank you IGF for hosting the event. Very excited to be here. I do agree with a lot of things you said at the introduction. CBDC for sure we have seen a clear strong momentum as one of the most important kind of long‑term strategic conversations that's been kind of carried out by many central banks around the world. I think many of us have probably read different research and reports published by many credible international organizations. So probably one of the most popular quoted figures is that at the beginning of 2021, we already have over 86% of all the central banks in the world actively looking at Central Bank Digital Currencies. I think this is incredible in looking at the pace in which digital payments is evolving. It's not to say we didn't have anything digital. We already had a pretty robust system thus far, but there's a lot of things that can be done better.

I think with newer technology, there's always a need to innovate. And I think we all know that the usage of blockchain, especially when it comes to cryptocurrencies, has already been about 11 or 12 years by now. With that evolution, we definitely have seen a clear sort of growth around cryptocurrencies, as well as stablecoins. I think just by looking at the blockchain technology in and of itself there's a lot of appeal in terms of thinking about from a system resiliency and security aspect what could a decentralized or distributed system can do to complement some of the existing system we have in place?

But I think there's many other reasons involved in that. Certainly, I think you touched around the competition issue. We have a lot of competition from the private sector in the sense the growth of stablecoins that might de stabilize financial system potentially as a risk, and therefore, you know, as a natural response from the central bank's perspective it is very sensible for them to think about how should I be looking at my own country's monetary policy and what is that relationship of my country's CBDC in relation to the stablecoin.

You also see many different stages of development. For example, we know there's really early experiment done in Ecuador and live CBDC already in places like the Bahamas and the Eastern Caribbean and of course in China they're running this huge pilot right now with many different uses in place.

So I think it definitely encourages central banks around the world to be at least starting to explore this research and exploration phase to understand what's the implications. And this is where I think things are evolving really fast because we're trying to, I think, we don't want to just fit technology on top of things when we don't need them. So it's extremely important to really identify what are the key reasons. And I agree, through some of the conversations as Visa we've been having with central banks, certainly, financial inclusion is a huge aspect when they're thinking about different ways. It's not only exclusive to CBDCs, but different ways. How can I bring more unbanked people to access financial infrastructures?

And CBDC can be a way to do that.

There's also countries in which they're looking at, you know, the decline of cash. And I think that's kind of quite relevant, especially for places like Sweden and Norway, in which as a complement to the physical cash the digital version of cash coming directly from the central bank is kind of the next evolution of that they want to explore.

So I guess the point is there's many different nuances and reasons that potentially propel any given central bank to actively look into it.

>> PIOTR SOBOLEWSKI: Thank you, Catherine. That was very interesting.

Let's take a look at multi‑factors for accepting CBDC in Norway. Peder, this year Norges Bank decided to start technical tests and analysis of the consequences of introducing CBDC. Of course, this is not the beginning of your adventure with this technology, as Norges Banks' CBDC research has been going on since 2016.

I'm very curious, what conclusions have you drawn from the research conducted so far? And what persuaded you to undertake these technical tests?

>> PEDER OSTBYE: Thank you, Piotr. Thank you for having me here. I hope you can hear me. This is a long question that takes some time to answer. As you mentioned, we started with our project almost five years ago, more than five years ago now, in fact.

And we have been going through various stages of research. We started by looking at a very high level at the consequences, the motivation and possible technologies. Then we went further into the motivation more CBDC in Norway because that might be different from country to country.

And there we learned, for us, we need CBDC, the reason to look at CBDC, is for contingency reasons that we have some backup to private solutions. Norway, it's a very low cash usage in Norway. So we are very reliant on the bank system.

We also face the problem that private solutions might have market power, and cash is less of a competitive constraint. So CBDC could promote competition.

And maybe most important for us is the sort of precautionary principle. There are a lot of developments in the payments area right now. We have an international organization of infrastructure in the traditional system. We have new sort of competitors, stablecoins, cryptocurrencies. And we have to look at whether CBDC is important for being able to provide our services in the future to secure that the Norwegian Kroner is attractive and that our payment system is safe and secure and that we have some control and governance of the system. So the precautionary principle is also very important for us.

So that was the main motivation and from that we derived some characteristics that the CBDC should have in Norway, and we validated those characteristics against technical solutions. We have looked at blockchain technologies and other technologies, traditional technologies. And we have come to the point that many new technologies are promising, but we still are not sure if they can satisfy those characteristics we need from a CBDC. So we found that the most sort of useful testing approach for us was experimental testing where we could, instead of testing one specific technical solution for all the characteristics we could test a variety of technologies to get better informed into whether they can satisfy the characteristics.

So starting this Autumn, we have started experimental testing. And our plan is to do that for until June, 2023. Then we will have more information. And then we can make a recommendation whether we should proceed with the CBDC project and what technologies should be used for more like full‑scale testing.

But the introduction of CBDC also requires political support and it will require legislative amendments. So it's not only up to the central bank.

And to this point, we feel that we have a pretty enough time to look carefully into this. So we can look carefully at the different technologies and make analysis. But of course we must also be prepared to move faster if that is necessary.

Of course, this experimental testing will also give us ‑‑ make us better equipped to move faster, if that is necessary.

>> PIOTR SOBOLEWSKI: Yeah, sure. Fantastic. Thank you for your insight, Peder.

In Poland, the roadmap to implement CBDC is not as clear or as proactive as it has been in Norway. On one hand, Marek Dietl, the CEO of the Warsaw Stock Exchange, has spoken about the need to create a digital Zloty. On the other hand, the National Bank of Poland has been mostly silent on the issue and is instead focused on developing traditional cash traction.

How can the decision‑makers be convinced not to ignore that increasingly popular topic of Central Bank Digital Currencies? Marek, do you see the potential to activate a wider group of stakeholders in Poland to start discussion on a future action plan around the adoption of digital currency?

>> MAREK DIETL: Thank you very much for the question. Thank you very much for having me here at this great event.

Well, the financial markets or capital markets are the prime users of the digital currency as it was shown by the Swiss example. Swiss International Exchange, International Bank for Settlements, and National Bank of Switzerland paved the way with the tests of digital currency. So the digital currency benefits for capital markets are so obvious and there are literally no drawbacks here, no visible drawbacks here. So I'm sure that the financial institution or capital market institution will keep on putting pressure for more usage of central bank digital currency, as this was the cheapest and the most efficient way to finance their capital markets.

Referring to what Catherine and Peder said, I would add that the digital currency, Central Bank Digital Currency, is kind of a programmable currency. It has the same risk aversion to cash, what Peder nicely described, but you can also use it in many other ways, as you can somehow almost program it. And the testing with China, that Catherine was referring to, 140 million test that. There's plenty of experiments, for example, limited lifetime of the cash, or some other programmable features.

So on one hand, capital markets for sure create beneficiary of that. As Swiss, Poland, by far the largest capital market in the region, the trading volumes in our venue are twice as much as the second in the region of Austria. So basically we need to be on the forefront of developments of hoping for introduction of further test and proof of concept of digital currency sooner than later, but I see also benefits for wider society, for monetary policy, for fiscal policy, economic policy, so plenty of usage. There will be increasing pressure from different sources to experiment with digital currencies issued by the central bank.

>> PIOTR SOBOLEWSKI: Thank you. We talked about Norway and Poland, but work on CBDC, as Catherine said, is going all over the world. There are participants in many groups working on this solution. According to the IMF, 110 countries are currently working on CBDC. That represents more than half the independent countries in the world. Catherine, how serious are these efforts? Do you believe all these countries see CBDC as a viable option? Or are these simply token efforts, done more for the sake of appearance? How is Visa supporting the participants in this discussion globally?

>> CATHERINE GU: Absolutely. I think, you know, in the next three to five years, I truly believe this is going to be a phase in which many different world central banks are going to be actively researching and exploring things, just because I think CBDC is such a huge topic. If it does get implemented, it really represents a new form of money that's never existed in this world before. It's a very serious sort of decision to make. I think as Peder mentioned before, it is not only just a monetary policy. It is also a political decision to be made. So I think we as part of Visa have been talking to many different central banks around the world, and we definitely know that there is no one‑size‑fits‑all solution to say this is how any CBDC should look like. At least what we can share is, you know, the commonality amongst all the central banks is you have to understand what are your motivations, what are your key policy objectives, in order for the technologies to then support it and design it appropriately.

Maybe for some central banks, in the end, they will after say two or three years of experimentation conclude that this is not necessary. It might not complement to the existing infrastructure. That could be possible. But the next two or three years of time to really do the active experimentation is worthwhile, and is very critical, for us to come to the final decision of whether or not it makes sense for any particular country in mind.

And I think that coming to the second part of your question in terms of what is Visa trying to do, I think it goes back to our root sort of approach, which is we are a network of networks. And we're trying to support payments so that is secure, fast, and seamlessly happening across different systems.

In and of itself, it's quite challenging. Especially as you're getting new forms of digital payments and new forms of digital rails around the world, such as real‑time payments and other sort of international sort of exchanges and inter‑switches and stuff like that, it's like trying to figure out how to then combine all of them together and so that money can seamlessly move from one place to another in close to real‑time fashion at a very economic cost. All of these are big questions to figure out.

I think as we're also trying to become more fluent in the space of digital currencies, we're starting to kind of look out for products and capabilities that should be relevant to support the future of Central Bank Digital Currencies but also any other forms of money that might be used down the road.

>> PIOTR SOBOLEWSKI: Great. Thank you for your comment. Now it's time to ask slightly a provocative question for Peder. Peder, do we really need CBDCs? Or can private solutions such as stablecoins like Tether USD coin, or expected Diem through Facebook, fulfill the same objectives? Why is the central bank a better issuer than a private company?

>> PEDER OSTBYE: Thank you, Piotr. That was a very good question that is a little difficult to answer, but I will try to make it clear.

I think kind of on the face, stablecoin and CBDC might look similar in many senses. They are stable against official currency. They can serve many of the same functionalities. But at the same time, it's also important differences. One kind of obvious difference is that the CBDC is from the central bank and stablecoin is not. But I think that you must look at even more fundamentally to kind of reveal the differences. The central bank has a kind of public mandate set out in the law which shapes how we think that CBDCs should be designed and how it should operate. So a central bank is not a profit maximizing. We are serving the public according to the goals set out in the law.

When it comes to private currencies, they are kind of intrinsically profit maximizing or serving some other goals that might not overlap with the goals of the central bank and that will shape their designs and decisions.

And then maybe to some extent you can use regulation to achieve some of the same goals. For instance, you can assume that the stablecoin, at least when it's issued by a private issuer, they will want to hold network advantages, network benefits, for themselves. And then you can use competition regulation or other regulations to enforce interoperability. While we have stronger incentives to have interoperability in the design, for instance. Because we are interested in that CBDC can be used with variety of payment solution. It can be Visa or others, but we don't want a user to be locked in to a specific private provider. So that's just an example.

So I think that you must always think of the purpose and have that in the background when you think why do we do it. And we will issue a CBDC for different reasons than a stablecoin is issued; although, the functionalities might be overlapping. And I would like to add that I think that CBDC and private solutions such as stablecoin can exist side‑by‑side. For instance, Private Sectors is better at innovation. And they might be more maybe brave in testing new functionalities and things like that. So they can also serve as a kind of testbed for what kind of functionalities a CBDC should have. So I think there's room for both here.

>> PIOTR SOBOLEWSKI: Thank you, Peder. Marek, you were recently interviewed by the Business Insider when you mentioned one of the advantages of CBDC might be assimilating consumption, for example, social benefits could be paid in the form of digital form, and could have a limited payment. It sounded interesting but also raised some concern. For example, in a non‑democratic countries, there could be a fear that this money might disappear from a bank account at any given time. How can we build trust in such a solution? And are there any control mechanisms to prevent it from happening?

>> MAREK DIETL: First learning is you have to be very careful what you say in interviews. And the second thing is, what also Catherine mentioned, we should not start with technology on how to program our currencies, but we have to start with the politics and what we want to achieve.

Also, what Peder was referring to stablecoins versus CBDC is also important. And also, Piotr, you mentioned that this issue of to what extent you want to privatize our monetary policy. Currently, most of the market economies or in old market economies the banks are responsible for creating money and the central banks are controlling the price for the money, so interest rates, but the supply of the money is controlled directly.

We can well imagine that we have a CBDC where there's direct control of the central bank of the money supply. So there is no question of price so directly, but the question is, or the price is managed by the demand more money, but not for the supply. The supply is perfectly controlled by the central bank.

And the same should be decided, the mandate for the central bank, is one thing, and a mandate for the Ministry of Finance or Ministry of Economics for social efforts, to what extent they can use this CBDC or programmable currencies. One thing is a limited lifetime. Other possible solution is that there's limited amount of or type of goods we can buy if we get a social support. So there can be more targeted social aid. There's a huge question to what extent we want to have control over our transparency in how people spend digital currency and to what extent we can allow for not testing who is the owner of the CBDC, but we can have anonymous transactions, very big issue, privacy issue.

The other thing is related to, for example, regional policies. For example, in Poland, there's huge disparities between some regions who are very rich or relatively rich and regions who are relatively poor. We can think about kind of a cash bank for purchasing, given the region. Recently, we have state aid for the tourist industry in form of the voucher for the families, in Poland, with digital currency you can program to next day. So you can have great choice of instruments for both monetary fiscal policy and economic policy as a whole.

As always, with the social institution, with capital I, you build the trust if there's a democratic control and the decision of policy‑makers and politicians are in line with the will of the majority with also acceptance to the voice of minority. So basically it should be an open process, open democratic process, however you want to program our currencies and economics.

So I feel that some economics, my colleagues, are trying to pursue it, given the setup of the currency, digital currency by the central bank, without taking into account this democratic process.

And I'm quite sure that politics and policies come first and then economics specialists can design, but something that was broadly accepted by the society. But I'm missing in this discussion about CBDC that there is not public discourse. There is no discussion about the variety of things we can achieve with the CBDC. We have only zero‑one decision. Are you for cash or for digital cash and nothing in between. This is most time‑consuming and most important part is this political decision process, as correctly stated by Catherine.

>> PIOTR SOBOLEWSKI: Wow. There's a lot of possible education for CBDC. Thank you, Marek for that detailed answer. That brings us to the second part of our discussion, where we will put some questions we have received from the audience to our panel.

We have received some interesting audience questions already, but if you have a question, I encourage you to send it through the platform now.

So Katarzyna, can you read the first question we have?

>> KATARZYNA CYRBUS: Yes, of course. Good afternoon, everyone. We have the first two questions that go together. So I would read them both. Would CBDCs pave the way for a global monetary system or a system of globally harmonized monetary exchange system which would also provide for abnormal fluctuations between currencies, and would it also provide a minimum level of transparency on the quantum of what each stable currency is issuing?

>> PIOTR SOBOLEWSKI: That's a great and common question we get asked. I think it would be great to hear from Catherine about this. Catherine, what's your opinion on this?

>> CATHERINE GU: Well, I'm not a central bank policymaker so it is a bit challenging to address it accurately, I guess. But I think what is helpful, at least from what we observe, as we're talking a lot around central bank currencies in different countries but also through international organizations we do see there's a strong need for standardization. And I think that's a really good progress to think about it. Because we understand that in the future CBDCs might be built on very different technology and very different probably rails and designs, but in order for CBDC to be able to interoperate between different domestic networks, so to speak, you have to have some sort of harmonization around standards, which is much needed, I think, for everyone working in this space. I don't know if in the future we'll have one monetary policy, probably not, because different countries have different needs, and probably Marek or Peder can say better than I can, but we do want to have a way of standardizing different form factors of money so in the future they can incorporate much easier with one another.

>> PIOTR SOBOLEWSKI: Thank you, Catherine. Peder, would you agree with that point of view or do you have a different opinion than Catherine?

>> PEDER OSTBYE: Yeah, I think it was a very good approach by Catherine. I think that when you hear that a global monetary system, that sounds very big and we have no kind of ambition with our CBDC project in Norway to reform the global monetary system. Not even the monetary system in a big picture. What we have so far is more of an efficient payment system perspective for Norway. And of course, it would be a benefit if different CBDCs from different countries could work together in some way. Being interoperable in some sense so that they could also contribute to a more efficient cross‑border transactions.

But we must also have in mind that CBDC, in some sense, might enable currency substitution in some countries. So if some jurisdictions introduce CBDC, it might affect the monetary system in other countries. And I think that that is something that is important for central banks to have in mind and to cooperate so that the international aspect and opportunities related to CBDC is utilized in the best possible way.

>> PIOTR SOBOLEWSKI: Okay. Thank you. I can see we have other questions. Katarzyna, could you?

>> KATARZYNA CYRBUS: Yes. So we have another question also from the audience online. Which is good to see. Okay. I have it. Despise the adoption of digital currencies, their popularity may remain low. People might still prefer to pay in cash or with other electronic payment methods available today, for example, transfers. How can we popularize solutions such as digital currencies and how can we make this solution accessible to everyday people? Taking into account the quite complex subject of CBDC which often requires specialist knowledge.

>> PIOTR SOBOLEWSKI: Marek, I would be interested to hear your view on this.

>> MAREK DIETL: Well, I'm happy to share my views, but in conjunction with the other question about the role of commercial rural banks in the system, because I think those two questions go together, by the way. What we observed, for example, in Africa, that there was a tremendous progress in the payment system because of the mobile payments, because there was no banking infrastructure, no ATMs, no terminals for acquiring cards. So even in many places in Africa, Visa card was not that useful, sorry to say, Catherine. So the mobile payment, because the most efficient solution prevails.

What Peder also said was a very important thing, that this should be a competitive system to the private one. So we can have private ones, we can have public ones, and the most efficient and cheapest one will prevail. Actually, digital currencies are very cheap as we get rid of many inter‑remediation, both in international trade, if we can set up our bank accounts with different central banks and we have a company which is trading globally, then we can have almost seamless translation of currencies, which can be of great benefit for the international trade.

I think digital currency will start with capital markets. The second stage will be international trade. Then the other will be in these segments and in the end it will be CBDC. And I'm sure that convenience and effectiveness of the costs versus benefits would make it popular. And it can be especially good for rural areas or areas with less developed infrastructure, because if it's done right it will democratize the payment. Even a small company operating in the Southeast of Poland would be able to trade with a partner in Argentina using digital currency of Argentina and the central bank of Poland, with very low spread and transaction costs, and real‑time transfers.

>> PIOTR SOBOLEWSKI: Catherine, what do you think?

>> CATHERINE GU: Thank you. This is a fantastic question. This is where from the Visa perspective we can add a lot of value to this discussion. What you would recognize is that with any sort of completely brand new technology being introduced to any economy, one of the biggest challenges that people normally face is the fact about adoption. How can you drive early adoption of CBDC from day one and really let everyone to use it from the beginning without massive sort of disruption to the way that you want to have the experience about spending, as well as from the merchant and business side about experience how they want to accept the money? So it is actually really an important question. I definitely want to sort of highlight amongst many of the conversation we have had with central banks, despite all the uniqueness about CBDC and motivations, this is actually one of the common, I guess, challenges that different central banks have expressed, which is how do I think about the use adoption. And from the Visa perspective, we've been building a network and a network of networks that we're familiar with how to drive those mass adoptions.

So to give the concrete of how we're thinking about it in the space, very recently, we actually participated in this global CBDC challenge which was hosted by the Monetary Authority of Singapore alongside several international organizations, and what we have sort of demonstrated is actually a very neat and straightforward sort of retail CBDC solution, and the key is to make it seamlessly integrated into the existing infrastructure.

So we're trying to envision how we can build a bridge with an onramp connecting these new potential CBDC networks seamlessly and the back end into the existing infrastructure, so that you can enable anyone, simply having, say, a Visa debit or prepaid card linked to a CBDC account, and spend with your CBDC from day one. You can go to your coffee shop tomorrow and use the new form of money that is CBDC to purchase a good. And then from the merchant's side, they will still be able to accept as is using the existing point of zero terminal.

I think if you're thinking about different phases of CBDC adoption, like the first phase about this bootstrapping how to drive that initial adoption is super crucial. It really needs to be designed well so that from the consumer's perspective it's a very familiar, accessible, and trusted experience that they want to enjoy. And then you don't cause massive disruption to the business and merchant side.

Now, I think Marek also mentioned a lot about these exciting programmable possibilities, as well as offline payment. In rural areas you might have limited connectivity and such. I think, again, that's the beauty of innovation and what more can we bring to the world. What I mention just now is a simple retail solution. We're trying to bring our existing capability to support the new CBDC when they emerge in the market. Thinking about going forward down the road is really about how could we support, say, for example, offline payment system? We have published research around it and we're actually building out sort of technology around it. And similarly, a lot of the programmable features on top of what we have built for the retail solution, it's also possible. These are things we do want to cocreate are central banks, as long as with rural areas, on those specific features.

>> PIOTR SOBOLEWSKI: Do we have other questions?

>> KATARZYNA CYRBUS: Yes. Actually, I received a message there are some people locally in the room in Katowice that would like to ask questions to our panelists. So, Luis, the floor is yours. If there's anyone local in Katowice who would like to ask their question via microphone there.

>> AUDIENCE: No, my question was answered already. Thank you.

>> KATARZYNA CYRBUS: Okay. Thank you very much. We have another question online. More philosophical question. What do you think about the CBDCs being managed from centralized institutions while the initial premise of digital currencies, stablecoins, is that the whole system is decentralized?

>> PIOTR SOBOLEWSKI: Thank you. I think the guest from Norges Bank might have some opinion on that.

>> PEDER OSTBYE: Yes. Thank you for getting that question. It's a good question. Central banks, they are centralized institutions, and we are performing our mandate according to the laws set by the people, in terms of the parliament. So in some sense, we are a democratic institution in other ways that decentralized cryptocurrencies aren't. I think it's important to kind of separate some technological aspects of CBDC with others. Like we can utilize some new functionalities like programmability and so on without necessarily being decentralized. So it doesn't necessarily mean that because you have programmability the system must also be decentralized. You can have both combinations. So I think that the existence of, how to say, decentralized currencies prevents us from looking at the same technologies. You also asked about what mission we have. We have a mission as a central banks as provided by law. And we are centralized in the sense that we can be held accountable, according to the Central Bank Act by the Parliament. So I think that there while there might be centralized elements in decentralized currencies, that might not be held accountable. I think it's difficult to go into this deep philosophical question here, but but I think a CBDC is not in any kind of conflict with decentralization, even though it may use the same technologies as CBDC.

>> PIOTR SOBOLEWSKI: Thank you. Another question?

>> KATARZYNA CYRBUS: We have a question still connected to coordination mechanisms and transparency.

So shouldn't CBDC have an accountable and transparent coordination mechanism? Meaning globally coordinated, as distanced from centralized? And coordinated not only by banks but involving all concerned actors in a balanced manner?

>> PIOTR SOBOLEWSKI: Catherine, could you reply to this question?

>> CATHERINE GU: Yeah, sure. I think it's a very interesting question. And certainly in principle, coordination and I think going back to the previous question being asked, you know, around harmonization I think it's the same principle in which we do need levels of coordination and I think this is the conversation that differs between different central banks, between themselves, and through international organizations, that's exactly what they're trying to sort of understand and achieve.

I think we need to look at coordination both in a domestic setting but also coordination around the international different players.

And I don't think we need to sort of treat coordination the same as centralized, probably, because I think as we're looking at CBDC there's a lot of discussion around two tier models, for example, hybrid, where you're trying to encourage the private and public to work in sync with one another, that's part of your own domestic design for the CBDC, how that might be done.

And then you're looking at those international Private Sector players, how can they connect and support different CBDC systems across the world?

But when we're looking at certain standardization, concretely, for example, what the data format should look like when you're sending a message around a transaction, that is something we do need standardization to be driven by existing international organizations that has been dealing with, you know, the current way systems have been run.

>> PIOTR SOBOLEWSKI: And we have probably one other question, right?

>> KATARZYNA CYRBUS: Yeah. We have the last question for now. Could panelists give examples of programmable features that would be useful in the early stages of CBDCs?

>> PIOTR SOBOLEWSKI: Marek, could you answer?

>> MAREK DIETL: Sure, very happy to do this. One thing, if I may chip into the centralized versus decentralized, I spent the early days of my career as an IT guy and we were fighting against mainframes and clients to changing the infrastructure to server client structure.

Now, with the cloud we do the reverse. We have clients on the computers and get rid of the server clients.

So I think centralization, decentralization, it's back and forth. It's always changing.

There was ten years of decentralization of cryptocurrencies and now we need centralization. And the two of us will somehow coexist and have differences, also.

But coming back to the question about programmable features, I'm a firm believer in this capital market story.

So I think we will have ‑‑ we can think about wallet where we get our, let's say, salary in the digital form, in real‑time, put into different financial assets according to our portfolio needs, and we go for pizza and out of this portfolio we pay for our pizza. So throughout the portfolio there's equities, stocks, cryptocurrencies, commodities, whatever you might think of, is simply decreasing.

This could be the first application for digital currencies for, let's say, rich world.

For a slightly less developed countries, then there can be the whole ease of payments, and as Catherine correctly mentioned we can have digital currencies also used offline when there are simply codes which can be decoded in our devices. And we can even think about very simple basic phones, not smartphones, which can handle the digital currencies.

So an electronic device can be our payment interface.

And this would be the first I can think of.

All the issues I mentioned, the social policy and so on, is rather second stage for me.

>> PIOTR SOBOLEWSKI: Okay. The questions are behind us. Finally, I would like to ask each of our guests to indicate one or two recommendations for regulators, supervisors, central banks, or companies. We would like to know how in your opinion the work on CBDC should proceed in order to achieve the intended result. Is it possible to create one global standard for CBDC? And what applications should we focus on? Maybe let's start with Catherine?

>> CATHERINE GU: Absolutely. I think just echoing what I said at the very beginning of this panel, I do think that in the next few years it's going to be critical, as all of us are trying to explore this new era, so to speak, before CBDC really comes to the world. And therefore I think this active dialogue is one of the most important things because, you know, we're all trying to learn something entirely new. And we need to understand what is the need from, say, central banks' perspective of how they think the Private Sector can best provide their value to the system. As we're building out rapid prototyping and research, also, we would really like to get feedback from both the central banks but also our banking partners and fintech partners to understand does our solution really address what they're observing in the industry. And also, by the way, recently, I think this week, we just published a user survey across the globe understanding people's perception on crypto and stablecoins and CBDC. I think over time, these sort of user‑centric approach need to be emphasized again and again so we can understand what are the potential use cases, what are the personas in which CBDC is really trying to target.

I would just quickly highlight in terms of your saying what are some of the key areas for CBDC certainly programmability such as offline payment is really, really interesting. Especially if we're trying to design or think about CBDC to complement cash as that digital version of cash, and especially for areas with limited internet connectivity to solve the financial inclusion aspect. I think this offline area is extremely interesting. And then I think privacy should also be an extremely important factor. And I do think a lot of the conversation we've been having is around how could you build, say, privacy‑preserving technology to deliver certain things through the payment system, including CBDCs.

>> PIOTR SOBOLEWSKI: Thank you, Catherine. Peder, could you be next?

>> PEDER OSTBYE: Yes. I lost your picture, but I hope you see me. It's a little difficult to sort of give advice to central banks since I'm from a central bank myself, but from my perspective I think it's important to be open‑minded, and to be sort of open to think outside the box, talk to people, talk to fintech companies, talk to other companies, because there's a lot of ideas around there. When it comes to design, I think it's important to be flexible, to test out flexible design, that doesn't lock in certain features into CBDC system. Because trade‑offs might change in the future. For instance, the attitude towards privacy and payments, the attitude towards new technologies might change in the future, and I think it's very important that a CBDC is flexible and adaptable to whatever the future brings.

>> PIOTR SOBOLEWSKI: Okay. And finally, Marek Dietl?

>> MAREK DIETL: I notice a number of viewers increased from 17 to 29 in the peak and now it's 21, so it's time to finish. So I will have just four advises. First advice is experiment. The second is experiment. The third is experiment. And the fourth is disclose the experiment results to the public so that people are well‑informed and then we'll have a better world with more democratic approach to issuing and controlling money through supply by a digital currency.

>> PIOTR SOBOLEWSKI: Okay. Thank you. At this point, we have to finish our panel discussion. We are ‑‑ we have four minutes left. I would like to thank our participants for the many insightful observations and opinions. I would like to thank the audience for their active participation in our discussion. It was a great pleasure to honest this panel. We hope that we have aroused your curiosity to deepen your knowledge in the field of CBDC, to implement a solution, experiment with it, or just observe the progress of implementation of digital currency. Good luck and goodbye.

(Session ends at 10:13 AM Central Time.)