MAS Reveals that Social Aspects of a Retail CBDC Featured “Strongly” in the Global CBDC Challenge: Report

Sopnendu Mohanty, Chief Fintech Officer at the Monetary Authority of Singapore (MAS), notes in the Global CBDC Challenge 2021 Report that history has shown that currency is a protean concept.

Mohanty points out that from livestock around 9000 BC, to the introduction of paper money around AD800, credit cards in the 1960s, and virtual currencies like Bitcoin in 2009, “the medium of exchange has evolved across the ages.”

He adds:

“Today, much has been written and continues to be, as International Organizations, Central Banks, and academics discuss the merits, challenges and potential of introducing Central Bank Digital Currencies (CBDCs) to meet the payment needs of a digital economy, and shape next generation payment rails.”

The report – “G7 Public Policy Principles for Retail CBDC”, divides the issues into the following categories:

  • foundational issues, “covering matters that include monetary and financial stability,” and
  • opportunities, “covering matters such as financial inclusion, cross-border functionality and international development.”

The motivations for this Challenge is founded in the second category, “albeit with references to the foundational issues in acknowledgement of the tight connection between the categories.” Mohanty also mentioned that the international community continues to develop “a deeper understanding of the foundational issues with each new study.”

But it’s not unreasonable to state that “we only have a theoretical understanding of how to realize the opportunities before us,” Mohanty added. He also noted that “notwithstanding the rich and growing literature, a degree of imagination is still needed to grasp the innovations being narrated.”

He continued:

“For this reason, the Monetary Authority of Singapore (MAS), in collaboration with our international partners organized a Challenge to realize the practical implementation of the opportunities.”

Through 12 novel problem statements – “highlighting opportunities as well as trade-offs, we sought out innovative solutions with a singular goal: How can we realize the potential of a retail CBDC, without making significant compromises to other principles that we value including security, privacy, financial inclusion, efficient cross-border flow of funds with stringent safeguards, speed, finality, among others?”

Mohanty further noted that over 300 submissions later, they have 15 finalists from 8 countries, presenting solutions that, taken together, “represents a body of practical knowledge on implementing a retail CBDC in any jurisdiction.”

He explained that the report presents, for the first time, “unique solutions, for the global Central Banking community – to decide what the future of money could look like, from a technological lens.”

Although it’s rich in information, this report will “not provide us with all the answers,” Mohanty clarified. He further noted that as the Analects of Confucius remind us, true knowledge includes “knowing what you do not know.”

He added that we can only hope that central banks and private sector stakeholders will “continue to push the boundaries with better solutions to address complex challenges in this field.”

As stated in the report:

“Although a technical competition by design, the social aspects of a retail CBDC featured strongly in the Global CBDC Challenge. Many of the solutions demonstrated strong consideration for the user experience and included (i) elements of offline access – to suit areas without strong internet connectivity or stable electricity supply; and (ii) the ability to function on a variety of devices – smart phones, feature phones and even traditional cards that we are used to carrying.”

The report also noted that this “reflected the thoughtfulness by the participants to
address the digital divide in different parts of the world.” The report also mentioned that “references to the unbanked and the underbanked anchored several of the pitches.”

You may view the full report here.

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