On the second day of Sibos, Benedicte Nolens, head of the BIS Innovation Hub, moderated a session titled ‘Reality check: How far have CBDCs come?’ The panelists highlighted the various stages of central bank digital currency (CBDC) development in their respective countries.
The panel featured Henry Campbell, manager of the Central Bank of the Bahamas; Assel Marchenko, CTO at the National Payment Corporation of the National Bank of Kazakhstan; Changhun Mu, director-general at the Digital Currency Institute of the People’s Bank of China; and Evelien Witlox, Digital Euro project director at the European Central Bank.
Mu advocated for a market-oriented approach to CBDCs, emphasizing the importance of market incentives to encourage merchant adoption. He stated, “We need to let the money speak and enable every player in the ecosystem to earn a profit for sustainability.” He likened Sibos to the Olympics, insisting that central banks should not be the market players but rather set the rules and supervise.
Focusing on the Chinese eCNY and CBDC, Mu outlined key requirements for establishing a robust ecosystem: providing incentives, enhancing the legal framework, and raising public awareness about the CBDC and its benefits.
Witlox discussed progress on the Digital Euro project, which is currently in its preparatory phase. She highlighted efforts to design the currency by incorporating feedback from stakeholders and ensuring it supports both online and offline usage. The goal is to distribute the Digital Euro through payment service providers (PSPs) to create a comprehensive digital ecosystem.
Privacy concerns were also addressed, with Witlox explaining that the Digital Euro model includes two forms: an online version subject to KYC and a privacy-focused offline version that doesn’t rely on a network, aiming to replicate the anonymity of cash transactions.
Campbell presented the Digital Sand Dollar platform in the Bahamas, which is currently in a limited production phase and set for full operation by 2025. He noted its potential for tax management, DeFi integration, and cross-border payments, emphasizing its role in reducing costs and increasing financial inclusion for underbanked populations.
Highlighting CBDC developments in China, Mu outlined a tiered wallet system allowing users to open a wallet using only a phone number, without requiring ID for the lowest tier. He emphasized the importance of protecting personal information while balancing privacy with anti-money laundering (AML) requirements.
Marchenko discussed Kazakhstan’s objectives for CBDC development, aiming to combat corruption and enhance cross-border payments. He stressed the need for public understanding that the goal is to track public funds, not individuals’ money, thus promoting transparency in tax usage.
Looking ahead, Marchenko anticipated increased CBDC adoption due to their interoperability for cross-border transactions. Witlox noted that the Digital Euro could foster innovation and contribute to a cohesive European digital payment ecosystem.
The panelists concluded that other countries and central banks seeking to launch CBDCs should develop clear business strategies and collaborate closely with the private sector, including commercial banks and telecom operators.