BIS head describes ideal ‘unified ledger’ for central banks and other financial users

General supervisor of the Bank for International Settlements Agustín Carstens spoke at the Singapore FinTech Festival on Feb. 22 and explained the digital financial facilities he thinks would finest match central lenders’ requirements. He called that facilities a “unified ledger.”

Carstens compared the theoretical combined ledger with a smart device, stating they both work perfectly with a range of parts. Unlike a smart device, a unified ledger would have open architecture, nevertheless, and would reveal programmability and composability, that it, it would run and package smart agreements. There are over 2 million apps offered to smart device users, Carstens kept in mind. He stated:

“A unified ledger is a digital infrastructure with the potential to combine the monetary system with other registries of real and financial claims.”

A unified ledger would not need to be decentralized or permissionless, Carstens stated, however might accommodate a range of jobs that “use of money as a means of payment and settlement” where the central bank plays a big function in the governance of the ledger and the consumer-facing sector remains in personal hands.

Central bank digital currency and tokenized deposits might exist in “partitioned” areas of the ledger, with smart agreements to facilitate their interaction, Carstens stated. The ledger might be utilized for whatever from micropayments on the Internet of Things to escrow in realty deals.

Related: BIS to release stablecoin tracking job and up concentrate on CBDC experiments

Carstens seized the day to reveal his existing thinking on stablecoin. He stated of stablecoin advocates:

“But what this view forgets is that what sustains fiat money is not the application of novel technologies but all the institutional arrangements and social conventions behind it.”

They likewise risk of depegging, he included. Stablecoins were established since they were technically able to do things other kinds of cash might not. Central banks ought to take those functions over from them.

Carstens likewise raised the hackles of the crypto community Feb. 22 with a blunt evaluation of the success of cryptocurrency.