Issue price – Newspaper Kommersant No. 239 (7440) dated 12/23/2022

Central Bank Digital Currencies (CBDCs) are a fairly simple idea. Under current conditions, the central bank issues cash and non-cash money, providing it to commercial banks for placement on accounts and wallets of customers. Banks provide mechanisms for managing money – from paper payments to cards and banking applications. In the case of the Central Bank of Central Banks, the central bank issues money, but maintains the accounts itself.

The ancestor of the Central Bank of Central Banks can be considered the electronic money of central banks. In 1990, Suomen Pankki (Finnish Central Bank) issued an advisory report on the Avant prepaid card project, for which he himself acted as the issuer and custodian of value. The project was launched in 1991. Technologically, they liked the idea, but banks did not want to see the regulator as a competitor and give it some of the liquidity. As a result, the project worked for only three years. The idea of ​​the Central Bank of Central Banks was returned to after the appearance of electronic money such as PayPal, PayCash and WebMoney, but things did not go beyond the initial discussions in the EU, the Russian Federation and other countries. With the development of cryptocurrencies, the states returned to this idea again.

The term CBDC itself probably appeared in 2013 in the UK, but the peak of popularity came in 2019-2020, when several dozen central banks announced that they were considering issuing digital currencies. This was influenced by many factors – the development of stablecoins, the plans of large non-financial players to create payment systems, the threat of oligopolization of the payment market from large banks and international payment systems (IPS), the peak of popularity of distributed ledger technologies. The attractiveness of the approach for the state was obvious – reducing the risks of banks, unifying the payment system, developed control tools.

But the first European players studied the issue slowly. Firstly, there was a reassessment of risks for the banking system (if money from banks flows into electronic currency, from what funds will they provide cheap loans?). Secondly, there was some sobering up about blockchain technology.

Thirdly, a reassessment of the advantages turned out to be inevitable – modern monitoring systems allow you to track all transactions in detail even without the introduction of the Central Bank of Central Banks, and the expediency of offline payments remained not completely clear. At the same time, it is not enough for the central bank to simply create a payment instrument – in order to catch up with commercial banks, it needs to create bonus programs, open APIs, call center services, and much more.

In developing countries, where the CBDC model is most successful, the main task of central banks is to ensure cashless circulation against the backdrop of a sluggish private banking sector. China has two specific tasks – integrating the main body of the country with diasporas around the world, and responding to the threat of the payment oligarchy created by WeChat and AliPay. In the EU, the goals are more vague – this is a response to the local payment oligarchy of the Ministry of Railways, and stimulation of fintech, and the creation of a payment system that is highly resistant to cataclysms.

However, there is a segment where the value of the CVTs unequivocally looks high – cross-border settlements. The technology creates a neutral environment where banks and clients in different countries can place value without creating a classic system of short-term relationships. This concept has not yet been fully realized – the rejection of the correspondent model is no less revolutionary than the emergence of cryptocurrencies. However, there are certain hopes that may come true.

Viktor Dostov, Head of the Association of Electronic Money Market Participants and Money Transfers