Speaking at the Singapore FinTech Festival on February 22, Bank for International Settlements CEO Agustin Carstens outlined the digital financial infrastructure he believes is best suited to the needs of central banks. He called that infrastructure a "unified ledger."
cartens compared the theoretical unified ledger with a smartphone, saying that both work seamlessly with a variety of components. Unlike a smartphone, however, a unified ledger would have an open architecture and display programmability and composability, running and bundling smart contracts. There are more than 2 million apps available to smartphone users, Carstens noted. He said:
“A unified ledger is a digital infrastructure with the potential to combine the monetary system with other real and financial rights records.”
A unified ledger would not have to be decentralized or permissionless, Carstens said, but could accommodate a variety of projects that "use money as a means of payment and settlement" where the central bank plays a significant role in governance of the ledger and the consumer-oriented sector is in private hands.
What a great validation of our #CBDC design! See the BIS article advocating for a #DLT CBDC based where the money from the central bank, #tokenized Deposits and Others #stablecoins coexist in the common ledger with #ecosystem and #regulator frames #becauseandbox https://t.co/yR1WCzzYU7
— EMTECH (@emtech_inc) February 22, 2023
The central bank's digital currency and tokenized deposits could exist in "split" sections of the ledger, with smart contracts to facilitate their interaction, Carstens said. The ledger could be used for everything from micropayments in the Internet of Things to escrows in real estate transactions.
Related: BIS to launch stablecoin monitoring project and focus more on CBDC experiments
Carstens took the opportunity to express his current thinking on stablecoins. He said of stablecoin advocates:
"But what this view forgets is that what underpins fiat money is not the application of novel technologies but all the institutional arrangements and social conventions behind it."
They also run the risk of disengaging, he added. Stablecoins were developed because they could technically do things that other forms of money couldn't. Central banks should take those roles from them.
carstens too raised the creeps of the crypto community February 22 with a strong assessment of the success of the cryptocurrency.
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