BIS Innovation Hub head Cecilia Skingsley unveils new project with the World Bank to speed up and secure development lending

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Cecilia Skingsley
Head, BIS Innovation Hub, Bank for International Settlements


Alice Fulwood
Wall Street Correspondent, the Economist

CECILIA SKINGSLEY: So it’s a great honor to be here, to speak at this fantastic conference about the subject of innovation and the possibilities that central bank digital currencies can provide. Thanks to Josh Lipsky for sending me the invitation. And hello, everybody that participates online.

So I hope to contribute to this discussion along two dimensions. First, I’d like to tell you why I thoroughly believe that the public sector must focus on innovation. And, second, coming more to the topic of the conference, I’d like to lay out some of my thoughts around what this concept, central bank digital currencies, can and cannot do. And your task, or our all task, [is] to develop international standards for them.

Now, I’m a great fan of history. But I also know that we can really only call a moment historic in hindsight. But still, I’m taking the risk of saying I think we’re going through really an inflection point in history, one of these moments where the way we think about certain topics [is] changing in fundamental ways. Technological progress increases humankind’s appetite for better goods and services and, in the example of money and payments, this means the appetite for transactions available 24/7 to settle instantly and be generally more available and efficient domestically, but also, importantly, across borders. And it’s critical to get the right infrastructures in place to facilitate that.

I think it’s also fair to say that technological change is so fast and foundational that it alters some core concepts in how we think of the financial system. So here I think about the very notion of money as a social and institutional construct. We accept money, paper money, in our accounts today because we expect that other people will accept it tomorrow as well. And this is a trust that hasn’t come by itself. It’s based on the institutional arrangements that have evolved over generations and have central banks working at the core of it.

Sometimes you can hear claims, sometimes within the tech industry, sometimes from without, that they can replace this framework of trust and functionality with algorithms and encryption. I think it’s fair to say that the practical results have been mostly unconvincing so far in the sense that all of us, almost, still prefer fiat money to pay for our shopping and our bills. But I think it’s also fair that we need to pay attention.

There are many technological ideas out there that have the power and the willpower that there’s a lot of potential. And two, if this is left unchecked, these technologies may develop into services used in our societies in a way that may not have the public interest as a first priority.

I think very much of money as a public good. It really [sits] there—up there with the military defense to protect us and the law and order also to protect us in a society. It’s a clever solution to make our need—to make economic value portable. And traditionally across the world through a long history of hard-earned lessons, the responsibility has been assigned to central banks to make sure that the money that is being offered meets criteria, such [as] being a stable store of value and being an efficient medium of exchange.

And central banks are, you could say, monopolists in the provision of money as a public good. I think about it as a starting point, because it’s really the starting point of an ecosystem. I think it should stay like that. But it’s important that central banks, together with the private sector, think about how do we make sure it works and it meets the needs of the future in the sense that we’re all going in a more digitalized way. And this is not a time to become complacent.

There is a lot of heated debate around these questions. I think it makes sense, and I welcome the discussion, because it raises very fundamental questions on how we think about, on one hand, the state and the private sector. But the acceleration of the digitalization of our society is both good and bad. It brings new possibilities, but it also brings reasons for concern. And in saying that I like history, I like to paraphrase what the French politician George Clemenceau once said about war and generals, which is that money is too important to be left a matter only to central bankers.

So when it comes to rebuilding the current but also possibly designing a future financial system, we will have to grapple with many complicated questions. It’s about protecting people’s privacy, choice, financial inclusion, stability, innovation, and also geopolitics, just to name a few.

I don’t pretend to have all the answers, but I am absolutely convinced that we need to have the debate to reach some deliberate answers. I think central banks should be a part of that discussion as the ultimate trustees of the monetary system. Investigate, explore what the money of the future will look like.

I’m also convinced that the current infrastructures in the financial system need to be upgraded to handle all these new kinds of demands that we see around us. Public policy objectives, such as protecting what we call the singleness of money, financial inclusion, again, and efficiency, again, resilience, they need to be met. And, that said, I acknowledge the fact that different countries with their different currencies approach this in a different way. A starting point you have in a particular country and the pace of transition vary and also the ambitions vary from the industry and from the central bank and from the legislators.

And that’s fine. We are different as human beings. Our societies are different. We approach things in a different way, and the fact that we see different pace in different world—in different parts of the world makes a lot of sense.

Just to give you one example, some countries trust the private sector to deliver greatly on what I would call more public policy objectives. But others, on the other hand, they have very different approaches and take a much more hands-on approach.

Let’s go into the CBDC world and—but before I do that let me say a few words about cash. The role that cash plays in our society is also being disrupted by technology both from incumbents and new players, and my firm belief is that I think cash should continue to play a role. People should have the option to use it if they want.

Coming from Sweden, one of the, I would say, most cashless societies in the world I see a very clear writing on the wall. Cash usage is rapidly going down and the network effects that used to be very favorable for cash nowadays goes against it.

Sometimes you can hear the scenario of a cashless society that there’s some sort of conspiracy led by banks and credit card companies forcing people out of cash. But I think this is—the reality is actually more boring. We just see a behavior shift towards digitalization and dematerialization, and speaking from my own experience once you have stopped using cash you really don’t go back because the convenience of digital payments is so powerful.

But it’s not the same. Again, it’s in every country and there are many social, economic, and development dynamics around it. But the trend is clear. It’s going, roughly, in the same direction everywhere.

So I would say that policymakers need to think very carefully about what they want to do. This is one of those situations where you have to think quite for a long time. . . Think about the structure that reflects societal preferences and work over time. Ensuring access to and then protecting the right to use cash is a policy decision and requires specific action. . . Taking those decisions, protecting societal preferences, doesn’t happen by itself. It takes work from our elected politicians.

And that brings me to CBDCs, the main topic of this conference. CBDC refers to money issued in a digital form by the central bank for use amongst either financial institutions only—that’s what we typically call wholesale—or available for public such as household and companies and then we call it retail.

So I’ll talk a bit about the retail CBDC in a domestic context and then I’ll expand the thoughts around the wholesale CBDC and what that could mean. Again, there’s a lot of discussion around this and there’s a lot of opinions so let me take just a few minutes to discuss some common statements when it comes to retail CBDC for domestic purposes.

It is a solution looking for a problem. Why should there be such thing in the first place? Things are just fine, and I can often hear people in the financial sector making us this argument. Now, let’s stop here for a while and think about is there any industry except, perhaps, the financial industry that would get away with that kind of statement.

Think about the pharmaceutical industry saying nope, that’s it. No more research. This is good as it is. We don’t—we don’t need any new drugs. You will have to go with the ones that we have. Or the car industry saying no, this is it. You know, no more safety improvements and no more climate improvements.

And I would also claim that things are not fantastic when it comes to payments. They are often opaque, they’re slow, and they’re expensive, and I would claim that innovation—and I think about retail CBDC as not only having the access but I think about it as a possible new infrastructure. It takes us to new places and could open up possibilities that is not obvious when you first venture down that avenue.

Another example from history that I like, from where I come in Sweden there is a phone company from Ericsson. They’ve been around for, I think, more than one hundred years. And in 1989, they were trying to develop something called wireless headsets. Before, you know, we were all dependent on headsets with cord. And they invented a technology that we now all know called Bluetooth. I think I have a picture of that. Yes, that’s the example. They were not trying to stream wirelessly from a tablet to a TV, like we do now, or have any fancy wireless speakers around the house or, as this example, in a car. They were not thinking about wearables, as we do—I have one here—power meters for bikes, or the Internet of Things.

All these things became possible after the basic technology of Bluetooth was developed. And someone back in 1980s could have said: What’s the problem with wires? It works really well. And Bluetooth, I’m afraid, may not ever have been invented. So similarly, if we dismiss CBDCs as a structure and a service because we don’t think that they address any immediate needs, I think we might be foregoing opportunities to improve the precious public good, which is money, and we could miss opportunities to provide better and cheaper services to people.

The next thing I wish to discuss, and this is an accusation often hurled at CBDCs, that this is a threat against privacy and an instrument for social controls. So technology, we know, can be used for good but also misused. And many people I think are rightly worried about how much privacy we’re losing in our societies nowadays because of technology, and how much our lives are already being monitored through our phones. So I think that sense of vulnerability certainly influenced the debate about privacy and financial innovations.

But let me remind you that privacy is not something that we have that comes by chance. There is a legal framework around these things as well. And our banks, they know exactly what we spend in everything, where, and how. But this information is protected by robust legal frameworks in most countries. So I think about these mechanisms, and they should be preserved and, if those countries decide to launch a retail CBDC, should follow the same framework. But it’s not enough to just talk or even legislate about it. We need to have the right sort of technologies as well.

And at the BIS Innovation Hub, which I lead, we are trying to walk the talk and we are experimenting with privacy-enhancing technologies. We have a project called Polaris, which is looking into this. And we will later in the week present our conclusions from another project called Tourbillon, which proposes new privacy solutions for retail CBDC. Let me also point out that offering a CBDC for those countries who choose to do that, it should be seen as an offer. It provides more alternatives. And those of us who are trained economists, we know that choices, more choices, enhance welfare.

It should not be something that should be offered—that should be forced on individuals, but more as a possibility. If you’re super happy with using cash, if you’re super happy with using your cards, you don’t have to do anything. You can just carry on using those things. And privacy is a social and legal construct which correlates with the developments and the strength of democratic institutions of each country. So this is not just a question about the central bank. This is something much bigger. And it should actually be a much broader debate, I think, about the privacy in our societies than only about money.

A third statement is that CBDC is a risk to financial stability, that they could facilitate bank runs and disintermediate the bank financial system. And here, I would say in terms of the risk of digital bank runs, the train has really already left the station even without CBDCs. We are already living in a world where digital runs can happen. And I think the correct question to ask is, could the CBDC make the problem worse? And here, I would say central banks have come together, many of the big ones, and said with the right—they have the access to the right sort of tools and they can make countermeasures if this is a problem.

But I’m not taking this question lightly. It is a big question and there is a vast literature around it.

Now I hopefully dispelled some, I would say, misperceptions. Let me take you to the global stage. We’ve already heard this morning about the cross-border payments. There are room for improvements. I don’t think there is an imminent role for retail CBDCs in the cross-border space. That’s probably very far away into the future. But definitely there is interesting work around wholesale CBDC.

But innovation is also about trying to improve the existing systems. We don’t only need to look into CBDCs. So let me just very quickly tell you a little bit about Nexus.

So there are about sixty-five and growing number of fast-payment systems in the world, but they only work in a domestic space. You can’t do a cross-border, cross-currency transaction in the fast-payment systems. Now, in Asia, where we heard before a lot of things is happening very quickly, some bilateral corridors, so banking—fast payments cross-border, cross-currency are available. It’s already there. But if you scale this up to all sixty-plus and growing fast-payments [systems] in the world, you would get a maze of almost two thousand bilateral connections.

So the Project Nexus is the answer to this problem. And we already have countries in Asia that is very committed in building this, and we hope to see other countries joining in the next couple of years to follow so we can get this going.

So say a little bit, then, coming back to the wholesale CBDCs. So they serve—they could serve a similar role to reserves in the current system, but they could have added functionalities that could address many of the frictions that we see today. And there is quite a lot of work that is happening in that space. We’ve done some experiments. We can see that we could have faster settlements and less risks. So this is something that is worth going—exploring going forward.

And one thing that we’ve also heard is about the possibilities of tokenized—tokenization, about tokenizing assets. And if we want to go down that road—which many are interested in, including the BIS—we need a system built on the trust of central bank money that could work as a settlement asset. And there you would probably need, we think, what we call a wholesale CBDC that would be used as a vehicle for settlements.

And if you look at the last—the latest Annual Economic Report from the Bank for International Settlements that was published in June, we sort of published our thoughts what we call the structure of a unified ledger that could be a common platform where assets and payment methods could come together and settle in central bank money. This is a vision, but the Innovation Hub is exploring projects that will experiment further with this concept.

When I come to this part of the speech, a lot of people sort of zoom out and say, oh, gosh, CBDCs, retail, wholesale, tokenization, ah, science fiction, blue-sky stuff. So let me tell you something that is happening not too few miles away from here. But we’re actually doing a real—building a real structure around tokenization together with the World Bank. And this is the first time I can talk about this in the—in the public space.

So we worked together with the World Bank and with the Swiss National Bank, run by the Swiss Center and the BIS Innovation Hub, simplifying the process for making development money available for emerging and developing economies through international financial institutions. This is a structure called promissory notes, and it’s quite an arcane structure as it is today. It’s paper-based. There are papers—piles of paper sitting in vaults across central banks, the World Bank, and receiving institutions across the world.

So here we are collaborating and say, can we actually get the tokenization methodology to work in reality? It’s not going to revolutionize the world, ladies and gentlemen, but by trying these things and make it work in a real-life setting, I think we will make a lot of progress.

So in the last bit of this speech at this conference, I know that we need to think about the regulations and the international standards. And what we need to do—sorry, can I go back one? What we need to do is to look at the three broad categories that we need to work together on. First, we have the legal and regulatory standards already existing. And these are the principles for financial market infrastructures and the multiple recommendations on financial integrity that are developed by, for example, the Basel Committee on Banking Supervision and also the Financial Action Task Force. And these are the one—sort of the committees that that align the rails across the world, so it works in a more seamless fashion.

The second category here relates to payment-specific technologies and operational standards. It’s about messaging formats and communications protocols. And finally, the cross-cutting technology standards. That is about general application that goes beyond just digital currencies. And here we are talking about everything that is how the public sector sort of presents itself to our citizens in the digital sphere. And here, I’m thinking about how to protect our resilience, security, but also how we can identify ourselves in a safe and efficient way. And these bits are super crucial if we’re going to get a much better improved financial services for the end users.

So a lot of work is done in this area. One of the critical things to ask is: Do you need to put these standards implemented early to get things going, or will that become difficult because you need to change them later? And to what extent do they need to be adapted so they can also facilitate countries who choose not to do any CBDCs? So in different ways, these questions are already being addressed. But I’m also hopeful that this conference could add further light on the way CBDCs could improve in terms of international standards.

So I hope I have convinced you that central banks needs to be participating in the discussion around central bank digital currencies and how to make it better, but they are not the only ones. We need to have a much broader discussion. There is no one solution to rule all solutions. I think different countries have different homeworks to do. But the many issues rhyme. So collaboration is useful. And this is one of the key objectives of the BIS innovation hub, in a structured way bring central banks together, but also private sector. Explore and do it in a transparent way.

I said I like history, so let me bring one last bit of that. And Joseph Schumpeter, he sometimes defined history in a bit negative way because he said, quote, “History is a record of effects, that vast majority of which nobody intended to produce.” And that’s not very nice, I think. Technology is something that doesn’t slow down for anyone. I think digitization affects us all. And I don’t think we should end up in a position of just having to live with the effects. I think we should be ambitious. And it’s a really collective responsibility to make sure technology ultimately serve economically meaningful activities, and ultimately everyone living on this planet.

So I thank you very much for your attention.

ALICE FULWOOD: All right. I think what you said was excellent. And I’ll take a seat here.


ALICE FULWOOD: OK. Hello, everyone. Thank you so much. Thank you to Cecilia. I’m sure I echo everyone’s sentiments when saying thank you so much for your remarks. Usually central bankers get a bad rep of being slightly dull speakers, but there’s nothing like a couple of military analogies to really grip the room and grab everyone’s attention. I’m Alice Fulwood. I write for The Economist, as Jen said earlier.

So you started your remarks by saying that you thought that although you couldn’t call the moment historic, that you thought that we were at an inflection point in history. And if I reflect on the sort of debate that people have had about CBDCs over the past two or three years, I remember a couple of years ago the sentiment seemed to be very much that central banks were reacting to a couple of sort of threats to their potential sovereignty. So everyone was sort of very animated about Libra, that project. Crypto as well in 2021 seemed to be sort of a potential sort of alternative monetary system.

Both of those projects are either nonexistent or suffered some pretty significant blows over the past couple of years. So why is it that you think there is this urgency for CBDCs now?

CECILIA SKINGSLEY: Well, thank you for pointing out these events. I think about them as a sort of wakeup call, that there are so much going on in the tech space that the idea that central banks can just sit on their hands and not participate in the discussion on how these things should evolve, that doesn’t work anymore. But that is not necessarily the same thing to say that we need to rush things.

I think many countries are sort of exploring this at a good pace. I’m very pleased to see that many countries are, you know, thinking what is money and how do we want this to work? OK, if we want cash really to work, maybe we need to put in legislation. That’s something my own country did, making sure that there is a sort of—not many—a particular group of—just 45,000, I think it is, should have more than forty-five kilometers to the nearest ATM. And that might sound a bit detailed. But I think legislators should sort of walk the talk and say, OK, if cash is important for people, we need to put the right legislation in place.

But at the same time, investigate. OK, if these opportunities are there with the technology, can we actually, yeah, be ambitious and see if we can put the system to a new equilibrium? And the first picture I have was not a coincidence. It was to try to illustrate infrastructure. And if you go back in history, often the private sector is first. We can think about that when it comes to canals in the U.K. and railways. But after a while sort of the public sector steps in and sorts out the foundation so that the private sector can innovate on top of that.

And that’s how we build our societies across history. And when it comes to money, it takes a bit of time, because you want to get things right. And that is not going to be sort of up and down because FTX goes up or down or something else goes up and down. We’re here for the long run.

ALICE FULWOOD: Yes, exactly. OK, and in the development of retail CBDCs, say that, as you described, this sort of new technological platform that other people can build on top of, we have seen several central banks sort of launch, you know—in sort of smaller countries launch their retail CBDCs and then sort of a very advanced pilot in China. And it doesn’t seem like there’s necessarily been this sort of big bang. Everyone adopts it. It sort of changes how everything works.

Do you think it’s possible to make a CBDC that is sort of useful enough that people mass-adopt it without sort of running into some of the risks that you talked about with things like destabilizing the financial system?

CECILIA SKINGSLEY: Thank you. You nailed it exactly. It’s hard to know what people—what we want, really. We don’t want to have too much uptake because we don’t want to have the banking system, you know, grumbling about that or any kind of troubles coming down that road. But when there’s not much of an uptake, then that is being perceived as something that is going against CBDCs.

I think it makes a lot of sense to run these pilots. I think—I’m not concerned about the fact that the uptake can be low. These things takes time. And I think the value of CBDCs sits in the offer, the fact that you can access it. And then there’s obviously a sort of—you have to come down to the real basic question, is it worth for the society to offer this? And I think that depends a lot on where the country is in its own development and its own political preferences. And I agree with those who say that an advanced economy with a high level of financial inclusion, they can be, you know, quite complacent. But not forever, because I think, ultimately, the sort of—the trust that we have in the monetary system—in the fiat monetary system is that it is—we can go from the commercial bank money into central bank money at the flip of a switch. And if we decide to—if we are in a society where cash is no longer working and the central bank by law [chooses] not to offer a CBDC, we have, in essence, a privatized supply of money and payments in that society. You may be able to do that, but that’s also quite a big decision in the same way as it is a big decision to actually offer retail CBDC.

ALICE FULWOOD: And we also talked a bit—well, you talked a bit in your remarks about cross-border CBDCs. And again, this feels like something that has sort of shifted a bit over the last couple of years. There’s been a lot more interest in building these sort of wholesale cross-border projects. There have been a couple of sort of successful ones, like Project Mandala, that seem to have sort of moved the needle in terms of how effective cross-border payments could be. Could you just talk about sort of the motivations for doing those kinds of projects and, you know, how significant you think they could become?

CECILIA SKINGSLEY: Yes, absolutely. So I think the Libra initiative wasn’t fantastic from a sort of business perspective, but I think it was very helpful in the sense that it create an attention around how do we actually want the cross-border payment services to work. And I think there was a general agreement, definitely on the political side, that now this is not good enough. And I think personally it’s—I think it’s a failure every time an honest, hardworking person think that they have to use bitcoin for making a cross-border payment. I would much rather see that he or she could use—you know, have a nice menu of choices of paying in the—in the fiat money space. Others have different opinions, but I think the fiat money should be there to deliver that sort of services.

OK. So, that said, the Group of Twenty agenda around improving cross-border payments is a long list of possible improvements. A lot of this is already sort of happening, but the job of the—the work of the BIS Innovation Hub is to say: OK, can we, through technology, build better structures together? And there is quite a lot of interest in some central banks to say, can we—can we use the wholesale CBDC concept to facilitate especially settlements, because this is just for the—for the ecosystem.

And one of the pain points we have is all these legal checks—again, AML and CFT—which I think is super important, but it also creates the various frictions and delays that we all are aware of. And the Mandala Project is to say: Can we sort of, through the smart contract technology, build into the transactions all these checkups kind of automatically? And then we could—we could, yeah, get the transactions done in a much faster way.

So we try to work—and I know that I’ve spoken to some of you here at the conference. There is a lot of projects going on, and I don’t expect you to kind of be on top of everything of that. And it’s not that we are building a big jigsaw, but think about it more as the Swedish smorgasbord—which is a buffet—where some of these projects going to work really well together and we build on top of that the findings, and others are separate things. But we’re starting to see the possibility of making the sort of tests in a year or two, so things are moving forward.

ALICE FULWOOD: And I guess on that sort of smorgasbord of projects, you know, how do you—especially with the cross-border ones where you—where, you know, maybe a small group of countries now is testing out a project and there’s a different project going on with another group of countries, you know, ultimately, those projects being interoperable and working together is sort of kind of critical. And if they make different technological choices or even ideological choices, you could end up with all these different silos. So how do you prevent that world being the one that develops?

CECILIA SKINGSLEY: Well, I have to say that’s a little bit beyond my pay grade in the sense that we want to demonstrate the art of the possible, and we are happy to advise groups of central banks who want to sort of rally around different ways to move forward.

So if we take Nexus, for example, which has nothing to do with CBDCs. It’s about improving the current systems we see in the world on fast payment systems. So, again, making it possible to go between them, cross-border, cross-currency. And we’re happy to stay on as advisors, but ultimately it’s about the political will in those countries. So that goes for Nexus, and the same for mBridge. We’re there to advise, and we report our progress in a transparent way. And I really like to enforce the importance of it being transparent, so everybody else can sort of look in and see what’s happening.

What’s ultimately going to happen? It’s hard to say, because it’s—again, it’s a question of political willpower. We know that not all countries in the world is happy to make transactions with everybody else. So we won’t have a, you know, completely frictionless global payment system involving all countries. But if we can make improvements from where we are, I think, yeah, then we’ve done a good job.

ALICE FULWOOD: And I guess, you know, maybe all of these sort of projects are proof of concept, as you sort of say. That the technology can work and can exist. And if I, again, sort of reflect, a couple years ago everyone was at the sort of research stage in the Atlantic Council’s sort of tracker. And now it seems like almost everyone is at the sort of project pilot stage. When do you think we might see sort of the map light up with implementation stages?

CECILIA SKINGSLEY: Well, again, as I said, we can—we can demonstrate the art of the possible. What’s ultimately going to kind of see the light of day is going to be decisionmakers on the sort of central bank and certainly political levels in many countries. But without saying too much, I think we will be able to see sort of the first at least test transactions in some of these projects we’re doing in, let’s say, two or three years from now. But then, if that is meaning that we’ll take it into fully operational and scaling, that’s too early to say.

ALICE FULWOOD: Yeah, that’s probably fair. And I guess, just one point on how you think all of this interacts with the sort of private sector offerings. You mentioned that you thought it was a sort of failure that people have to use Bitcoin. But at the same time, some of the projects are borrowing things like automated market makers from decentralized finance and from sort of those other kinds of sort of private sector development of technology. Do you think ultimately a lot of the sort of public projects will interoperate with crypto? Or how will that sort of boundary between the public and private sector evolve?

CECILIA SKINGSLEY: So we have nothing against trying out the technologies that the crypto world has created. I find it hard to see that crypto, as such, would sort of work through the public rails. I think some countries make the choice to regulate and supervise crypto in a sense that it may be possible in the future. But I think ultimately that countries are hesitant in sort of accepting something else as payment vehicles than fiat money. Again, I think it’s about protecting what the public sector thinks is the key offer from the state.

And as I said in my talk, I think the inner and outer defense is sort of key offers from a state. And I think the third thing is making sure there is a version of money so people can transact in a safe and efficient way. And I don’t think many central—many countries, because now we’re on a country or state level that’s sort of above central banks—is willing to let that go into private hands.

ALICE FULWOOD: All right. And on the project that you announced that you could talk about now with the World Bank to sort of tokenize aid and, you know, get rid of the promissory note paper system that is apparently still used, so—basically, I just want you to tell me more details about this.


ALICE FULWOOD: So how is it going to work and what will the efficiency gains be from putting it into place?

CECILIA SKINGSLEY: Yeah, so here is the thing. When you start a project, you don’t really exactly know how it’s going to work. And this is really—it might sound trivial, but that’s a bit scary when you come from the world where I come from, which is the central bank. Central banks are used to be sort of in full control when they run a project. And they beauty with setting up the BIS Innovation Hub is to identify a problem and say, OK, there is too much frictions going on in a particular area. Let’s see what sort of technological solutions we can apply to that. And then the team sort of go into that together with one or two, sort of private vendors who knows things that we don’t have in house. And say, OK, how can we actually get this to work?

And you don’t exactly know what’s going to come out sort of six to twelve months later. And sometimes it works and sometimes it doesn’t. But you have to try. And I think the try with this particular project is to make sure that you get rid of the paper-based structure that you have in both the sending country and the receiving country, because there are very few people involved. And there are very few transactions. So that sort of knowledge that sits in these institutions can be difficult to sort of handover from person to person. So if you can automate this through this kind of platform, I think it would be—would be safer. Would you save a lot of money, will it revolutionize the world? No, probably not. But I think it’s a very tangible way to actually put the technology to work and sort of build to order to work to an area where you shouldn’t have paper anymore. But we’ll see. We’ve just started that particular project.

ALICE FULWOOD: And I think we have probably time for one more last question. So, you know, we’re at Lansdowne now. And we sort of reflect on how this sort of debate has changed over the past couple of years. You know, there’s been more progress towards putting retail CBDCs into reality. There’s been sort of greater discussion of these sort of cross-border wholesale tokens. In Lansdowne in a few years’ time, if the Atlantic Council is kind enough to host it again, where do you think we’ll be in terms of the tenor of the debate then?

CECILIA SKINGSLEY: So I think many more countries will have discussed and probably legislated around the protection of cash. I think that makes a lot of sense. I think we’re—you know, the public sector is there to serve members of their societies. And if the societal preference is to use cash, I think you need to have a legislation that reflects that. So that’s number one. I think we will—hopefully we will have fast payment systems moving—kind of not the system, but the payments moving cross. And I think we will see tokenized assets being able to move quicker, and with much more choice from the consumer side. And I hope we have been able to build in many of these very tedious controls, that we want to have because we want to fight money laundering and finance—the finance of terrorism, but we really want it to work for everybody else that are honest, hardworking people. And, yeah, basically, they deserve a much better system than the current one.

ALICE FULWOOD: All right. Well, thank you so much, Cecilia. That was a great note to end on. Thank you to the Atlantic Council and to the Digital Dollar Project for having myself and Cecilia on stage.

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Image: Cecilia Skingsley, head of the BIS Innovation Hub, speaks at the Atlantic Council's Exploring Central Bank Digital Currency conference on November 28, 2023.