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Reshaping the Design of Money

By Ross P. Buckley (University of New South Wales (UNSW) - Faculty of Law), Douglas W. Arner (The University of Hong Kong - Faculty of Law), Dirk A. Zetzsche (Universite du Luxembourg - Faculty of Law, Economics and Finance; Heinrich Heine University Dusseldorf - Center for Business & Corporate Law (CBC); European Banking Institute), Anton N. Didenko (University of New South Wales (UNSW) - Faculty of Law), and Lucien van Romburg (The University of Hong Kong - Asian Institute of International Financial Law) :: SSRN | April 1, 2021

This paper focuses on how technology might reshape payments going forward. It considers the policy issues and choices associated with crypto-currencies, stablecoins and sovereign digital currencies and emphasises that there is no single model for sovereign digital currency design. While Bitcoin and its progenies could be safely ignored by regulators, Facebook’s proposal for Libra, a global stablecoin, brought an immediate and potent response from regulators globally. Any proposal by the private sector to move into the creation of currency — the traditional preserve of sovereigns — was always likely to trigger such a regulatory response, as well as the launch of sovereign digital currencies by other major central banks. While China has moved first, dozens of other countries are now investigating their own central bank digital currencies or other forms of sovereign digital currency. This paper argues that central banks should first focus not on rolling out novel new forms of sovereign digital currencies, but rather on transforming their payment systems. In time, domestic money and payment systems are expected to evolve so that central banks cooperate with (new and old) private entities to launch digital currencies that better underpin monetary and payment systems at the domestic, regional and international levels.

In this episode of Looking Back Looking Forward: Building Better Payment Systems, Professor Douglas Arner discusses the progression of electronic payments, since its acceleration towards social development from the last hundred years, and recently towards the impact COVID-19 on global economies.

Keywords: sovereign digital currencies, central bank digital currencies, Libra, digital yuan, COVID-19, payments, stablecoins, blockchain


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