| Beju Shah, Head of Nordic Centre, BIS Innovation Hub
| Dr Lars Hupel, CBDC Evangelist, Giesecke+Devrient

CBDC’s Offline capabilities is a crucial topic that holds significant implications for the future of digital payments and financial systems worldwide.

As digital transformation rapidly reshapes the way we conduct transactions, it is imperative that we ensure inclusivity, accessibility, and privacy for every individual and business. CBDCs have emerged as a powerful tool in this transformative landscape, revolutionizing the way we think about money.

However, we must address a critical question: How can we ensure that CBDC systems work for everyone in society, regardless of their location or connectivity? The answer lies in exploring and understanding the offline capabilities of CBDCs. The ability to conduct transactions offline not only provides a layer of resilience but also supports crucial objectives, such as financial inclusion, accessibility, and privacy.

To discuss the intricacies of CBDC offline capabilities, guests Beju Shah (BIS Innovation Hub) and Dr Lars Hupel (Giesecke+Devrient) joined FNA to explore the technologies, security threats and risks associated with offline payments and delve into the CBDC design criteria that enable privacy, inclusion and resilience.

| Simon Chantry, Bitt
| John Kiff, Satoshi Capital Advisors

Many central banks are studying, designing, prototyping, or rolling out retail CBDCs. Motivations differ significantly across jurisdictions, but there is one potential advantage that could be common to all cases.

If central banks agree on some basic technological foundations, retail CBDCs could interoperate and become a solution to cross-border retail payments. Is this an overlooked potential benefit of retail CBDCs?

We asked guests Simon Chantry (Co-founder & CIO, Bitt) and John Kiff (Head of CBDC/ Digital Captial Markets Advisory, Satoshi Capital Advisors), who joined session #12 of the CBDC Broadcast, to discuss.

The session covered:

• Whether a CBDC could be a catalyst for responsible innovation in the digital economy and ensure interoperability with legacy and future payment solutions for cross-border payments
• The possibility of a CBDC crowding out other payment instruments
• Whether achieving full interoperability is likely if retail CBDCs are designed with local use in mind
• The factors determining if CBDCs could be interoperable
• How foreign exchanges issues typical of cross-border payments be solved via interoperable CBDCs
• The competitors of cross-border retail CBDCs- correspondent banking, stablecoins and cryptos or both
• Whether an FMI’s decision to provide interoperability between a CBDC with another form of money would be a commercial decision based on its business model
• Whether the type of CBDC issued to the market would impact the willingness of FMIs to provide interoperability
• The benefits cross-border retail CBDCs bring to the table

| Commissioner Hester M. Pierce, U.S. Securities and Exchange Commission
| Professor Patrick McCarty, Georgetown University Law Center

We are in the midst of studying and discussing the potential effects of a digital dollar, a digital liability issued by the Federal Reserve, available to everyone in the United States-in other words, a retail CBDC for the United States of America.

Theoretical benefits around the idea of a CBDC include greater efficiency and redundancy in the payments ecosystem, a field for innovation, greater financial inclusion, and the potential to lay the foundations for better cross-border transactions. But not only are those benefits still to be verified, but there are also risks as well in the form of financial instability, operational, reputational, surveillance, and money laundering risks. The devil is in the details, and CBDCs are not the exception, If a digital dollar is issued, its regulation and design will be particularly responsible for its success.

Having explored CBDC motivations and challenges from an Asia-pacific, Latin American, UK and Canadian perspective, we now turn our attention to the United States. In this session, guests Commissioner Hester M. Peirce from the U.S. Securities and Exchange Commission (SEC) and Professor Patrick McCarty, Adjunct Professor, Derivatives/ICOs and Cryptocurrencies at Georgetown University Law Center join FNA to offer an insight into CBDC deployment and its relationship with other digital forms of payment and benefits/implications of a national rollout from a U.S. perspective.

The session covered:

• The regulatory challenges and implications of issuing a digital dollar
• Whether a digital dollar poses a real risk of disintermediation of banks and financial stability and how CBDC design regulation could avoid this
• The role of the digital dollar in cross-border payments
• The advantage and impact of rolling out a digital dollar before other G7 nations
• Whether new forms of money, such as stablecoins and cryptocurrencies, compete with the digital and physical dollar
• Whether regulators and supervisors have the knowledge and skills to cope with the evolution of digital money and assets
• The regulation of stablecoins and cryptocurrencies
• The demand and readiness for a retail CBDC in the U.S

| Anneke Kosse, Bank for International Settlements
| Illaria Mattei, Bank for International Settlements

Today, 90 per cent of central banks are exploring Central bank digital currencies, with over half already developing digital currencies or conducting experiments.

In Session #10 of FNA’s 60-minute webinar series, The CBDC Broadcast, guests Anneke Kosse and Ilaria Mattei from the Bank for International Settlements joined FNA to discuss the recent report ‘Gaining Moment – Results of the 2021 BIS Survey on Central Bank Digital Currencies and the report “Options for access to and interoperability of CBDCs for cross-border payments.”

The session covered:

• The current state of CBDCs
• Emerging trends surrounding bank engagement, motivations and intentions
• The critical questions to address when developing a CBDC
• Common interoperability models and the likelihood they are to succeed
• Wholesale CBDCs and cross-border payments
• The cross-border frictions CBDCs could address
• The importance of international cooperation to the success of a CBDC

| John Velissarios, Accenture
| Raoul Herborg, Giesecke + Devrient

CBDC is a very particular product. An extremely successful rollout, with massive adoption, could affect financial stability as deposits could migrate to CBDCs. On the other hand, poor adoption could mean a reputational risk event for the central bank. Therefore, unlike most central bank products, it looks like CBDC design should be user-oriented, with consumers and merchants as the main users and commercial banks as distributors. This means that before CBDCs are rolled out, there has to be a design phase that studies under which design options the CBDC will be used will be convenient, as well as safe, reliable, and efficient.

Guests John Velissarios (Accenture/DEA/DDP) and Raoul Herborg (Giesecke + Devrient) joined FNA for session #9 of The CBDC Broadcast as we discussed how some design options could shape the rollout and adoption of CBDCs. The session played close attention to the particular balance CBDCs must achieve to be successful, that is, being effectively adopted without jeopardizing the stability of the financial system.

The session covered:

• How to achieve a digital version of cash to provide an instant and secure payment option for everyone, everywhere
• The obstacles in making CBDCs accessible to all groups of society and factors considered to ensure inclusivity during the design and pilot phases
• Whether central banks should develop global standards to ensure interoperability between jurisdictions
• CBDCs and offline payment capabilities
• Whether banked people with easy access to commercial bank money feel the need to hold and use a CBDC balance

| Larissa de Lima, Oliver Wyman Forum
| Erica Salinas, Amazon Web Services

In previous sessions of The CBDC Broadcast, we focused on the many motivations for rolling out a CBDC, from achieving higher financial inclusion and higher transactional efficiency to preserving monetary sovereignty by compensating for the declining use of cash and by countering the entrance of new private forms of digital currencies.

Session #8 of the CBDC Broadcast featured guests Larissa De Lima (Oliver Wyman Forum) and Erica Salinas (Amazon Web Services), who joined FNA to discuss their joint report: Retail Central Bank Digital Currency: From Vision to Design. The report sets a framework to support policymakers in evaluating the interdependencies between policy and technological choices and highlights the importance of ensuring CBDC motivations, design principles and policy decisions are properly aligned.

The session covered:

• The principles that influence CBDC design choices
• Key policy trade-offs when designing a CBDC
• What services a Central Bank may offer if it positions itself close to identify-based services
• The role the private sector plays in designing a CBDC
• How central banks can make CBDCs as attractive as possible without threatening financial stability
• The choices around ledger technologies for CBDCs
• The risks associated with the implementation of a CBDC system
• Whether a G7 bank is likely to introduce a CBDC in the next five years

• A brief introduction to simulating payment systems
• The advantages of using an agent-based model for modelling complex adaptive systems
• FNA’s model for simulating CBDCs
• How FNA’s simulator works and how it can help organisations understand the impacts of introducing a CBDC
• The presentations also include a brief demonstration of the CBDC Simulator.

In this episode of FNA Talks, Kevin Gardiner, Managing Director and Global Investment Strategist at Rothschild & Co joins host Adam Csabay to highlight the key lessons from the Covid-19 crisis, assess its impact on the future of Fintech and explore the implications of CBDCs on the roles and responsibilities of Central Banks and Financial Services providers.

00:00: Introduction

01:19: To what extent has your business been affected by the COVID-19 crisis, and what key lessons would you highlight for our listeners?

04:05: Has Fintech- or innovative technology in general- provided any useful tools for tackling these disruptions?

05:13: Which key areas should fintech innovation focus on going forward?

08:12: In what ways will the financial industry be affected by developments related to CBDCs and the rise of digital money in general?

11:04: Can the Libras- or digital money issued by BigTechs- challenge Central Banks’ monopoly over monetary policy?