 a set of metrics by which to evaluate the robustness of various digital currency technologies against the requirements set by various stakeholders. Identify areas for standardization to enable implementation of digital currency. Organize a conference on an annual basis to share information on best practices, technical standards, and lessons learned on digital currency implementation. To achieve the above objectives, the activities of the Digital Currency Global Initiative are focused around three main pillars to drive the synergistic engagement, innovative use, and standardization of digital currencies. Three working groups are set under the standardization pillar. First, architecture interoperability requirements and use cases. Second, policy and governance. And third, security and assurance. The relevance of cash as a means of payment in developed economies is diminishing. Business and households are increasingly turning to cashless payment methods such as debit and credit cards and e-wallets. Now, ubiquitous services such as online shopping and other services seamlessly integrate electronic payments into their interfaces, creating better use experience. Cash is generally incompatible with the digital economy. As households purchase more goods and services online over time, demand for cash as means of payment will decline further. There are important benefits for government, reducing its relatively high reliance on cash. Digital instruments are more convenient, efficient, and potentially greener than cash. A central bank has the sole right to issue paper notes, fiat money, to the general public, and distribute them through commercial banks. A retail CBDC is a digital payment instrument or type of digital money, denominated in the national unit of account, and a direct liability of the central bank, which is usable by members of the public. It can be observed that the issuance model for retail CBDC in some pilot implementations are also based on the same distribution model, albeit with certain modifications, which we shall hear about during the webinar today. Central bank digital currencies or CBDCs offer in digital form the unique advantages of central bank money, settlement finality, liquidity, and integrity. They are an advanced representation of money for the digital economy. Digital money should be designed with the public interest in mind. Like the latest generation of instant retail payment systems, retail CBDCs could ensure open payment platforms and a competitive level playing field that is conducive to innovation. Unlike physical cash, which is simultaneously a store of value and a medium of exchange in itself, digital money is first a store of value and can only be used for payments if there is a process in place to transfer balances. According to the Bank for International Settlement, more than 80 percent of central banks are engaged in some work on CBDC. Our panelists today are engaged in discussions on pilot CBDC projects and we will hear from them today about their retail CBDC project design, which will provide an overview of the challenges facing central banks in retail CBDC implementation, as well as the technologies behind such innovations. Let me introduce our panelists. Speakers will take the floor in the following order, Mr. Peter Kirstens, advisor, European Commission, and leader of the policy and governance working of the Digital Currency Global Initiative, Ms. Noblett-Panton, Division Chief, Financial Market Infrastructure, Bank of Jamaica, Joan Schmoldt-John, Schmoldt's advisor, E-Krona, pilot division, Riksbank. In the tech information security specialist, E-Krona, pilot division, Riksbank. During the webinar, our speakers will shed some light on the thinking behind the architecture design for the retail CBDC projects on which they are working to provide some answers to questions such as the architecture for issuing the retail CBDC, the privacy of transactions, identification requirements, and interoperability with existing payment systems or other digital currencies. Now it's time to turn to our speakers. I'll now be inviting our speakers in turn and invite Mr. Peter Kirstens, advisor, European Commission. Peter, your presentation will discuss some of the thinking behind the digital euro project, and you have 20 minutes. The floor is yours. Thank you. Thank you very much, Bilal, and it is a pleasure for me to be here with you from all over the world to present, indeed, the current thinking at the European Commission and the European Central Bank for a digital euro. And I must say from the outset that it's a project on which no decision has been taken yet. So far there has been no decision taken that a digital euro will be introduced, but a great deal of effort is being spent on researching, testing the possibilities, and given the amount of time and effort that's being put into this project, it would probably be unlikely or maybe disappointing if in due course the authorities would not decide to pursue with it. If I could have the next slide, please. So my presentation I will address a few of the definitions and key concepts of our work, then why we are looking at a digital euro, what are from our point of view elements for a viable digital euro design, how they relate to private initiatives, different types of digital euro, and then the current process we are in on developing the concepts, the experimentation, what decisions need to be taken, and what are the next steps. Can I have the next slide, please? So first, what would be a digital euro? Because many people think that the money they have on their cards or in their bank accounts is also digital. So what would be so different about a digital euro compared to the digits and the numbers that you see in your bank account or that you use with your Visa or Mastercard or your PayPal or your Venmo, or whatever payment, digital payment instruments you may be using. And what is essential for a digital euro, as it is for any central bank digital currency, is that it is central bank money. It is not money issued by private institutions. It would be made available to citizens and businesses in digital form. So that distinguishes it from cash, so notes and coins because notes and coins are made available often through Mint, but the decision to issue them is the decision of central banks, but they are not in digital form. And they are for use in payments. So that would be the purpose of the digital euro. It would not be that much as a store of value. It would not be as a settlement instrument in wholesale banking and so on. And that's why we call it a retail CBBC or a general use central bank digital currency. Now I've underlined retail there because to many people the notion of retail implies that it is low value. This is not the intention of our project. We think it is a general purpose payment instrument for use by households and businesses. And in particular when businesses need to use it, of course the values cannot and should not be restricted too much. The digital euro would be complementing and not replacing cash. So it's not that we are going to or we have plans to withdraw cash, notes and coins from the market. And it would also not replace wholesale central bank deposits which are available of course to the banking system. And we would develop this enclosed synergy with industry and users because we are driven very much by user needs, in particular the payers and the payees and but also of course the payment intermediaries. And we want to respond with this digital euro to their expectations and their needs. It is a very deliberative process based on a lot of consultations, some of it already done, some of it still ongoing, but a lot of experimentation, evaluation of these experiments and different technology solutions. There have to be decisions taken and then it will have to be implemented and rolled out. We can have the next slide please. As to why would we do a digital euro, we have to start from the situation where we have a payment environment in the European Union, in the eurozone, that works fine. So it's not that there is something that is broken and that needs to be fixed. But there are of course a number of very important trends which we see and which a digital euro can support or can respond to. First would be supporting the digitalization of the European economy and as Bilal you already referred to in your introductory comments, cash, notes and coins cannot really be used in the digital economy or cannot really be used online. So for online and digital payments we are currently relying on payment instruments developed by banks and payment institutions, but this is not public money. This is private money that is circulating in the market. And we believe that a public alternative is important. Secondly, the reason why we're doing it and this will be a feature I think in many presentations is that we do see a declining use of cash as a means of payment in quite a few of our member states, not all of our member states, but in quite a few of member states we see a very significant decline in the use of cash and this decline was strengthened of course by the pandemic which forced people to act and transact more online and then of course they couldn't use cash. The third driver in the European Union for the digital euro is sovereignty considerations and the fact that we want to preserve a public money option among the emerging private digital means of payment that are circulating in the European Union. A new means of payment that are emerging, stable coins for example, issued by large technology companies inside or mainly outside the European Union, but also the likely possible future emergence of foreign central bank digital currencies. So these three digitalization declining use of cash and preserving a public money, European public money alternative are the main drivers as to why we are considering a digital euro. Can I have the next slide please? Now how would a central bank digital currency, a digital euro, but any central bank digital currency compare to other forms of money and assets? And the first most lesson on the screen is probably the most important is that a central bank digital currency is a liability of the central bank. For the rest it may in its appearance it may not be very different to commercial bank money or even stable coins, but it would be a liability of the central bank. Currently the only payment instruments that exist and that are liabilities of the central bank are cash, which is available for the general public and central bank deposits which are only available to a limited number of users mainly banks. To compare this to commercial bank money, electronic money and stable coins that entail a flame or a liability on someone or something, these are liabilities of private parties and users always run a credit risk or a market risk, with a particular credit risk, towards the private operators and private issuers of these means of payment and the value, the absolute value or the relative value of these means of payment, these forms of money is not assured by a central bank, it is assured by the companies on whom they are a liability. And then you also have of course means of payment that are not a liability of anyone, like for example bitcoin, it is a sui generous instrument, but it doesn't present a claim on any company, any issuer or any pool of assets that may support it. So this is really the categories and the important concept is that it's a liability of the central bank. We can have the next slide please. Now in our considerations together with our colleagues at the European Central Bank and but also national central banks in the eurozone and finance ministries of our member states, we are looking very much at what are the necessary elements to have a viable or successful digital euro. And most important in there is the top left corner, which is the end user perspective first, the users, the payers and the payees, and how can we ensure access, how can we ensure inclusion so that they can use it, but also how does identity identification, authentication work in a digital euro environment? Privacy has to be assured, our consultations so far have demonstrated that this is the top concern and the top interest of consumers throughout the eurozone. And how would it interoperate with private infrastructures, but also with other means of payment or other forms of central bank digital currency? And finally, how would it be secured? These questions all translate or have consequences for the design decisions that will have to be taken as to what precisely the digital euro will look like and I'll come back to the possibilities there, but different designs and different design options have different effects on the end user perspective on the access, on security, on the privacy, on the interoperability. Necessary also for a viable product are a number of very complex legal issues and probably one of the simplest of the legal issues is, well, is the central bank actually authorized? Does it have a legal basis to issue a central bank digital currency? And if not, what would it take? How could you give them the jurisdiction to do that? And under the Treaty on the European Union, there is a legal base for this. But this legal framework may also have to cover other issues such as access rights, privacy, possibly security, authentication, and so on. This, I would say, are mainly questions of the interface intermediation, the end user aspects. If you look more into the core of the system, so if we go forward with a central bank digital currency, excuse me, can you go one slide back? If you go back to, no, one more one, excuse me, this one, yeah, this. If you look at the core of the central bank digital currency, what would be the core infrastructure at its middle? So what would be the part that's operated by the European central bank itself? And how does this relate to the front end, intermediaries, the interfaces of the consumers? And a very, very important decision to be taken there is whether the European central bank would be using existing infrastructures such as Target and TIPS, its Target Instant Payment System infrastructure, which can be put to good use for a central bank digital currency as well, or whether a new technology stack would have to be set up and developed to support a digital euro, and that would depend also a bit on the design decisions. Separately, and very important for the viability of a digital euro would be how it would be protected against money laundering and terrorist financing. So how would we ensure that such a digital currency would not be abused? And then finally, we envisage a digital euro very much as being intermediated by the private sector, banks, payment institutions and so on. And how can this digital euro be intermediated by them? How can it be put into the pockets onto the mobile phones or the cards or whatever interfaces users will be having by these players? If I can have the next slide please. So I've already hinted at that we see it very much as a central bank digital currency, as a liability of the central bank, but developed as a complement and in complementarity with private initiatives. This is for us a very, very important because the private sector is close to users and users have contacts much more with private institutions than with governmental institutions. And making available retail means of payment basically means that you are in continuous contact with users so we think the private sector is a better place for that. But also central banks do not have a mandate nor an ambition to take over and displace the banks and the payment institutions and develop a front-end solution for all consumers nor do central banks wish to empty the balance sheets of banks or displace banks in the current economic structure. But if we are going to work with private intermediaries, which is very much our intention, I put it there likely, but it's actually certain that these companies would not just be anyone, but that these companies would be licensed companies that are properly supervised. I can have the next slide please. Now in all of this structure there's basically two main approaches for a digital euro, but we see this debate also in other central bank digital currency debates, and that is whether the digital euro would be an account-based instrument, in which case payments between a payer and a payee would always go through a clearing system and would actually move between different intermediaries. And in the eurozone this could for example be TIPS, the target instant payment system could be the central infrastructure through which the exchange of account balances and credit claims in central bank digital currency could move, so the settlement of the transaction would really take place outside the actual transaction between the payer and the payee. Or will we have a digital euro that is a bearer instrument where there is no separate settlement, but where the transaction and the settlement are one and the same thing. The payer hands over the payment instrument or access to the payment instrument to the payee and that's the end of the story. Just as we see currently with banknotes and cash where there is no settlement handing over the cash or handing over the banknotes or the cash is the settlement. And if we go for a bearer solution this will then raise these questions. This raises questions as to what kind of technology do you use for that, what kind of technology is stacked, and should that be a blockchain or distributed ledger technology based stack or not. To the extent that the digital euro would be there to offer an alternative to private stable coins, if that is the main objective winning out that would of course plead for using more of the same technology, more a distributed ledger based infrastructure, then if other objectives were to win out and no decision on this has been taken because the different approaches both have advantages and disadvantages. And we need to see how that bears out. If I can have the next slide please. So from the user perspective what would the digital euro look like? Well the user would mainly see an interface and it would look pretty much the same as the interfaces they're currently used to, could be cards, mobile phones, smart watches, other carriers, but it would be available throughout the entire euro area. So all member states of the euro area, there are still debates and this is part of the design discussions as to whether or not the digital euro would be available outside the euro area but still within the European Union or where it would be also available for retail use, by businesses beyond the eurozone and beyond the European Union and potentially globally. It would serve the segments of the needs of all segments of the population, so not just the digitally natives, not just the crypto or the crypto or the script kids, but really for everyone with special attention for trying to address financial exclusion challenges which always exist. Luckily it is not the majority of the population in the European Union by any stretch of the imagination, but we do have an unbanked part of the population, we do have vulnerable groups and they must have access to a digital euro as well. We will be very mindful of privacy because given that it's in digital form, it leaves a lot of digital traces including on identity of the users and we must make sure that privacy is preserved which is not the same as anonymity. Privacy really refers to the fact that the processing of personal data is done under control, is legitimate, is not more excessive than what is necessary, but it is not, it does not mean that it has to be fully anonymous. Compared to other means of payment, what we really would set the digital euro apart from other means of payment is that it would be by definition risk free, it's central bank money. It would be digital and it would really play in our hope a big role in the emerging industry 4.0 discussions about machine to machine transactions but also in web 3.0 so very much the blockchain based crypto web developments that are emerging. Of course if it's digital some people say well it doesn't work offline then but to us digital and online are not the same thing so we also think that it could work in digital form while being offline even though the capabilities of people to be online of course and increase on daily, weekly, monthly basis. If I can have the next slide please. So while we have come a long way already with our colleagues from the European Central Bank in assessing and consulting, in experimentation, we need to go further on this and we are digging out all of these areas with great precision as to what precisely does a digital euro mean for central banking, for monetary policy transmission, how would it operate in the economic system even if we don't intend it to displace the past and commercial bank money, could it still have that effect, how would citizens really respond to it, would they understand it, how really would it have to be designed and we have to go into much more detail than we have so far both the privacy aspects but also remuneration for example if we are going to have intermediaries playing a big role in digital euro these intermediaries private intermediaries are unlikely they're going to be doing this for free so the question is what kind of remuneration can be built in because currently in cash and notes there is no remuneration even though the use of cash and bank notes is of course by no means free there's no remuneration for it and then we need to go much much further in the technology aspects in the infrastructure, how decentralization would work, how the offline usage can really be promoted. Can I have the next slide please. So we are still in the stage we were already but we're still in the stage of active listening to stakeholders both consumers so and there I mean the users of the digital euro both at the paying end but at the pay and at the payee end but we're also engaged very much and listening to public authorities of the european at the national level and of course our peers and counterparties in other jurisdictions and of course the market participants and then I mean in particular the payment intermediaries and the banks because they are absolutely essential for a successful rollout of the digital euro. Can I have the next slide please. So this also the conceptual work is continuing at every stage of our work we have to assess whether the answers which we are finding the solutions which we are finding whether they really meet the policy objectives that we set forward which are as I said digitalization addressing the client of cash the ensuring a public alternative to private money whether that objective is met and also whether the expectations and the needs of the users will be met and we have to continue testing practical solutions as to whether or not they perform in practice as we expect them to perform based on the theory or based on the design I can have the next slide please. So in the middle of 2021 a couple of months ago we launched this project much more publicly before we had a much more private consult well it was a public consultation but it was much more under wraps discussion but now we are in the what we call the investigation phase which is much more public we are much more outgoing now to stakeholders have a market advisory committee and the aim of this is to get also answers from the market to many of the questions that were raised in the digital euro project that was presented based on the initial consultations and we're also trying to develop a minimal viable product meeting all of the requirements which I set out and see whether it all and confirm whether it meets all of these objectives which we set out so this is a lot of preparation a lot of consultation a lot of testing to ensure that the euro system the authorities of the euro system will be in a position to take an informed decision on going forward with a digital euro if they wish to do so if we weren't doing these experiments and if we weren't preparing this way we wouldn't be giving them a real choice because if we don't prepare for it if we don't assess it the only choice they would have is not to do it but by doing all this preparatory work they can decide to say well this is very good we are going to do this and they will take the decision to go forward or they may still say well look it is very good it can work but we still decide not to do it because we don't really see the need for it so we're really not prejudging the decision anyway but we want the authorities of the euro system to have a full choice of going either way in this very very important process can have the next slide please so and that's where it's also the last slide of my presentation the current process we are in a process of consultation we were there before conceptualization investigating the investigation of the solutions the technology the impact of these solutions but we also have to prepare decisions and these decisions will have to be translated into legislation so that will also be required if we go for a digital euro and then that decision that legislation will have to be implemented the infrastructure will have to be built and deployed and the digital euro will have to be distributed so that it actually is available to the market we started this seriously in 2020 actually there was work on it going on before but it really got serious in 2020 and this entire process up until the potential introduction on the market of a digital euro will take us right up to 2026 some people say well that would be faster we would have to cut off quite a few corners if you want to go faster than this because at the eurozone we want to get it we want to get it right rather than wanting to get it fast thank you very much and I would be happy to take any questions although I say I understand that the questions will come after all the presentations thank you okay thank you very much peter so peter you provided a very good overview of the challenges facing the European Commission for the digital euro so this I think we will see with the other panelists whether they are also looking at similar issues and it provided a very good overview of some of the complexities and operational challenges you know facing central banks in issuing retail cbdc so let's move on now to our next panelist miss noblett panton divisional chief financial market infrastructure from a bank of Jamaica so welcome miss panton so miss panton is going to provide us an overview of the retail cbdc project from bank of Jamaica and miss panton you have 20 minutes for your presentation please thank you thank you good morning good afternoon to all I am sharing my screen can you kindly tell me if you're seeing my screen yes miss panton we can see your screen please go ahead okay morning again I've been walking you through what we have been doing at bank of Jamaica with respect to central bank digital currency we are in the pilot phase of a cbdc I just want to walk you through from the start what we have been doing and some you know how we are looking ahead they they the points I'll be touching on you know mainly the motivating factors why bank of Jamaica you know made this decision to start a cbdc what are some of the benefits how will it how will it work some of the design requirements that we looked at our project status our pilot design what we have done so far where we are now some of the risks that we recognize and the mitigants that we have put in place I also want to share with you be somewhere we are all at different space or globally I would want to share with you some of the lessons that we have learned because they may be important for others and some of the key success factors and what's next now we all know what the same central bank digital currency is which is this digital form of central bank issued currency and is there for legal tender I want to speak quickly about the different models to sort of provide you with the background why we chose a particular model and when we started to look at cbdc we looked at other models that have been used are you know proposed to be used across the world and we start by looking at the cross border which entails digital currency issued by the central bank the commercial banks which can be used for foreign exchange transaction across jurisdiction to say is this the one we want to use we look at the wholesale cbdc which entails digital currency issued by the central bank directly to the commercial banks which in turn is distributed by commercial banks to the retail market Peter spoke about retail earlier and we look at retail in the sense that we are looking at the digital currency which is issued by the central bank directly to the individuals this would mean that all users in the country would have a cbdc wallet with a central bank and we said to ourselves is that what we want what are the aspects of this intermediation for the commercial banking sector and then we thought about the hybrid cbdc which is really a cross between your wholesale and your retail and the cbdc that we decided to issue in Jamaica is solely for domestic use and it will not be used for cross border transaction we chose the hybrid model and this will entail the bank of Jamaica will issue cbdc to deposit taking institutions licensed under the banking services act in Jamaica so we are going to be issuing to the commercial banks the building societies and the merchant banks in addition cbdc will also be issued to payment service providers that are operating the banks fintech regulatory sandbox we we have been making it clear in our communication to all citizens that cbdc is not a deposit it is cash in their purse or in their wallet in this case in this case it is in the digital purse or the digital wallet we made a decision in the in the in the in the designing of our cbdc that it will not earn interest because as we have been explaining to persons once you put cash in your pocket it does not earn interest and cbdc is just digital cash in your digital wallet we'll be issuing our cbdc and a one-to-one basis with cash that is one jamaica dollar of cash would be equivalent to one dollar of cbdc now in thinking these things through what were the motivating factors that we thought of why we decided to go this route and one of bank of jamaica's key objective is to support jamaica's digital transformation by facilitating access for each citizen to quick save and reliable digital retail payment mechanism so there are other points of interest apart from the financial inclusion aspect we wanted to look at increased efficiencies for banks as they related a cost for handling cash and courier costs for distribution that we saw as being inefficient and we felt that cbdc would assist that great efficiency in the currency management process of the central bank also and also we wanted to provide a great provider a socially optimal mix of retail payment instruments that are out there in the market and very importantly interoperability between existing electronic retail payment systems because those were issues that we saw that we hope and we wanted cbdc to address so some of the benefits were spoken about already financial inclusion and to get that we wanted to bring more persons into the official financial sector so we also looked at um simplifying know your customers criteria to ensure that the the man in the street now can operate within the financial sector and i may touch on that later on we felt that it would be a benefit to be more efficient than cash instantaneous even for remote transaction just like cash it will not cost you then we looked at the safety issues the users can benefit from a now safety when compared to physical cash even if the device is the last your money should can still be accessed the data collection we felt we'll get a better feel of data because the cbd solution provides real-time data on usage numbers volumes as well as other key values for cbdc data provides additional accuracy for policy decisions to take place now how will it how will it work tier one boj will mint the central bank will mint and issue cbdc to the commercial banks just as we do now with cash as well as with you know provided to issue to payment service providers in tier two now the commercial banks and the payment service providers will in turn distribute cbdc to business or to individuals through cbdc wallets so we are using the hybrid we issue to the commercial bank and the payment service providers and just as what we do with cash now and they will in turn distribute it through you through the use of wallets to the to the to individuals individuals and businesses will hold their cbdc wallets with their respective banking commercial banking entity and make purchases or receive payments using phone or through some other device such as a payment card now when we look this slide provides and I'm not sure some of the things that we we thought of when we were thinking about designing our cbdc digital fiat currency that is non-interest bearing right we didn't want to be for our cbdc to be interest bearing we want something that will be tailored for Jamaica we want it to be user centric and easy to access we don't want persons to be turned off to think that this is some high technology technology that they cannot use of course I spoke about interoperable we want the system to be able to speak with each other we want to to satisfy the email cft whenever we introduce our cbdc to satisfy the email cft issues we want it to be operational 24 7365 instant process of transaction and settlement finality improve the currency management process as I indicated ensure cyber security data protection and privacy uh peter mentioned those earlier support further access and uses for p2p person to person person to business person to government and vice versa so those are some of the large business requirements that we looked at when we you know thought about cbdc for Jamaica so in May 2020 the bank of Jamaica took the decision to introduce a cbdc as an additional means of payment and launch it in July 2020 just as an additional means of payment view there was no plans to say we are getting rid of cash it's just we want to provide this additional payment means since that since May 2020 and we have been we did a number of consultation meetings peter spoke about that earlier with stakeholders and sources of our telecom providers so we not only spoke to the entities in the financial sector but we spoke to our telecom providers in Jamaica we have two two telecom providers we brought them in we not only spoke with the telecom providers but we recognize that we had to also speak to their regulators so we also spoke to the office of utility regulation in Jamaica and we talk about their infrastructure because the infrastructure must be right to introduce a cbdc and we talk about their tele their communication infrastructure that will underpin the deployment and the usage of cbdc then in August by August 2020 we launched the procurement process now that is to bring in a solution provider that can provide us with what we are looking for based on the over design how we are seeing it so on the 16th of July 2020 we extended an invitation providers of technology technological solution for the provision of a cbdc in the banks fintech regulator sandbox because we operate a regulator sandbox at a central bank in phase one of this procurement process we had 43 submissions and these submissions came from all over the world these are not just submissions from Jamaica they came from all all over the world we based on our design requirements recall i showed you that we shortlisted to six vendors then in phase two the six shortlisted shortlisted vendors were invited to conduct a product demonstration to present their solution based on our needs so after that we went into a phase three where the vendors are further shortlisted to four from six for a final assessment and then out of that the this entity e-currency mint limited came out ahead as a technology solution provider and we had to get that approved at the cabinet of our country so in fact we were looking this is type of solution that we were looking for a turnkey product that clearly establishes the currency management process as product as solution that can make issue redeem disrupt similar to the currency management process of of the of fear currency that we do we wanted a system right that would seamlessly interface with the national payment and settlement system or real-time growth settlement system we want a system that supports the distribution of cbdc through financial intermediary payment solution and facilitates immediate integration with the existing legacy and payment system want something that will come in and just integrate seamlessly what we have we want to a system that will be able to facilitate end user on more to end user on mobile devices on cards we wanted a system that will facilitate robot risk management tools establish support real-time monitoring of email and the transaction level something that could provide all the capabilities and configurable for doj use so that is a solution that this entity based on coming on top in terms of the procurement process this is a solution we were looking for so we went ahead and say so we are now in in the phases of June now and to December because we thought between that period of time we want to test this solution so we actually went ahead and set up for each month what we are going to do the different teams what are the different teams we've been doing for the different month we broke that down in two stages we were going to have simulation testing just simulate with the solution provider what is it that we hope to see coming out of the cbdc solution then we recognize in a stage we're going to have the managed pilot we are going to have real activity stake in place at that point we thought about the entities that will be in the pilot of course the central bank we wanted at least five dti's and at least a payment service provider then we said okay what are the use cases that we need to simulate or to to manage in our pilot and government payment is a huge payment in Jamaica right so we want to see how can we cbdc handle the the payment of government salaries and allowance the payment of pensions the payment of welfare or path payment is is a welfare payment for health and education mainly for health and education to to low income persons in our country how will the cb can we use cbdc for that then on our toll roads our toll roads are highly cash based in that you go pull up to the toll booth and you pay with cash how can we use cbdc because you know there's a lot of safety and security issue with just that how can cbdc be a solution for that we are a big remittance country in terms of inbound remittance and we want to say hope that can oh can cbdc solve that issue of not having persons standing at remittance agencies in line to collect remittance and of course paying for goods and service so small vendors we have a number of small businesses in Jamaica small vendors persons who may serve sell if you come to Jamaica we have our famous jerk chicken so persons who may serve sell on the streets you know selling jerk chicken on the street how can cbdc be of value to them so we then we look at the activities what are we what do we need to do the int we started to look at interface and the integration connecting the system that the the the equipment um they they hold the hardware and software being stored within the central bank and within the the other commercial entities that will be using it we want to see we look at the hardware in terms of the currency process record i spoke about the mint in the east end redemption we want to look at those activities then we want to look at the payment activities and distribution etc and we want to see as we go along how we continue to onboard new participants so this is how we were seeing it in our design so we we look at the pilot and we we spoke already about the project initiation the pilot design the sandbox i explained that we were testing it in our sandbox and we talk about the managed pilot that is now having the entities in the sandbox and actually transferring real money real cbdc real currency while in the in the pilot and then we look to national rule out so what have we done we have done the api user interface training we had to do a lot of training okay not only for the central bank for all the commercial entities commercial funded bands that will be dealing using the the cbdc um we had to go through integration and connectivity testing because these are there are certain specific equipment that needed to have been used and i as i indicated earlier we wanted a system that would seamlessly integrate with our legacy system our rtgs with our payment systems as we have them in jamaica we are to establish data centers not only in the central bank but with the the with the commercial banking and entities the shipment of the hardware all of those things came in and then we do did some dry runs the bank at the bank of jamaica we actually designed and developed a cbdc wallet and an application for boj staff and i just pause here because i spoke about the commercial banks but at the bank of jamaica for all our staff we have what we call our own commercial bank where you can open an account this is only for staff members at the bank of jamaica so that aspect that banking aspect for the central bank we are also as staff members with the part of the the the pilot so we engage persons we engage pilot participants got their commitment through through what we call you know mo use to say we will participate at this point in time one of the the largest commercial bank one of the largest commercial bank in jamaica is in the pilot a national commercial bank that's the only commercial bank at this point in the pilot up to for that will go up until december as as i indicated before the bank of jamaica banking department are the first two entrants in the pilot we have deployed a phase approach now to getting additional pilot participants we are very proud we are very proud to see on the ninth of august 2021 we minted we did our first minting ceremony of actually minting cbdc during the testing phase in the pilot we minted 230 million worth of cbdc doing that phase and this picture is just a picture just representing the day of the the maintenance ceremony where we have the governor our deputy governors and our minister of finance you know it was just a photo of from this 230 million that we have minted so far we have now issued five million to that commercial bank that i told is already in the pilot and we have issued one million to the bank for jamaica banking department because this is the amount now that is going to use to provide wallet service to staff members and the commercial bank will provide wallet service to to to their customers so um we are far away into the pilot a matter of fact that 65 percent is much more now and we are in the the the this phase where we are developing and we are thinking about now for the rollout the pilot will end at on the 30th of december and we want to roll out during the first quarter of 2022 the things that we have tested so where we know as i indicated we have gone to the initiation and went to the planning because a lot of the work came before the pilot we are development phase now at this point we are still doing ongoing work on system integration communication we saw has been very important uh advising so we actually in terms of a name for our cbdc we had a national um competition where for we asked persons in the country to provide a compete to provide a name a tagline etc for all currency that is over now in terms of how we have a name but won't disclose it here now because there's still some things that we are looking at in terms of um ensuring that the name is not being used by anyone else you know those sort of legal things and of course the legislative amendment which is very important for those looking at cbdc and peter mentioned it also um when you look at your your central bank act your central bank legislation it must be important that in that legislation it speaks it speaks critically to the fact that cbdc is a legal tender and it can only be issued by your by the central bank that wasn't in our in our in our act so at this point we are to look at our act and make amendments to that and if that is being is going through the legislative process and that should be ready by the time during the time of rollout next year the risk of course we we know them the aml safety risk the design of the cbdc will continue to allow for tracking of all payments by the fis and by the relevant authorities we're not doing anything different from what we do with fair currency because right now the commercial banks have to undergo and ensure that aml safety issues are you know are being looked at and they're able to track cash coming into their organization so it is no it will be no different the data privacy is very important bank of jamaica cbd solution protects the protection of personal identity through a built-in solution such as encryption techniques digital signatures multi-factor authentication i spoke already about the hybrid model that we are using so this intermediation which would have been a risk if we if we were if we were to have allowed the man in the street to have a cbdc wallet with a with a with a central bank so the bank design of the system system implicitly mitigates against this intermediation as it implies the two-tier model we issue to the commercial bank and they distribute to to to their customers the cyber security issues very important in patient of the beat the cbdc solution is a high level of administrative physical and logical controls allows for role-based user management in the minting and issue in process external in we even have external external to the bank and into that key mean that is in right now with independent volume vulnerability assessment and testing so we are not only saying it we have independent party coming to look at this walk through the system one of the issue that we saw the rick is a slow takeoff because culturally persons are not just we are going to say persons are going to to to go get into cbdc so quickly so we have implemented a robust communication plan anyone looking at cbdc in your country that is very important to put in place and we have been in the print media social media on our website i spoke about the tagline and naming competition that we had thrown out there to the public we have done focus group and we are continuing to do surveys the next step we've been doing carried out a bigger survey november 20 to gauge understanding and expectation of our public and of course by then we'll rule out our need so the lessons learned quickly when we start this you have to have dedicated resources to do this often enough often we don't have enough resources thrown into a project like this so what we did we do the cross functional teams committees to do different aspects we need to build technical capacity prior to us starting to write down the first word on cbdc we're providing our staff with external training we were involving external groups outside of jamaica just to draw from experiences shared in the in the Caribbean we have the central bank of the Bahamas with their sand dollar already rolled out we were with them right throughout we have the eccb with their dcash another entity that we were with so we draw from experiences we and we seek support from other countries the business requirements which i spoke about we can't speak talking about that we are going into cbdc without spending significant time in building and identify the key requirements what is it that you are looking for uh analyze the business operations that will be doing doing this we talk about assigned officers with responsibility the manager's going to be a number of project conflict when you're in it right so we have to ensure that we are looking at those and managing those and managing the changes as we go along the communication i spoke about must be continuing continuous what we have found is documenting each stage very carefully because sometimes we sometimes we have to go back and look at something to fix something that we are seeing the that they started vendor expectations we have to have continuous and i'm telling you this is conscious because you would have had a meeting with a vendor as a commercial bank know and then you're asked certain other questions that to meet with them so you have to have continuous discussion they're going to be some legal issues between yourself as a central bank and the commercial banks out there so you the lawyers must be at the table when you are looking at these things and they need to be there very early then another important thing we have to set the success criteria we are doing a pilot but at the end of the day what will success look like so we just thought about it and said these are the things we want to see we want to see out of this amount minted we want to probably see five percent in circulation as a percentage of cbdc minted in the pilot we want to see actual usage in this we want to see of the number of entities committed to onboard we want to see at least eight percent of them coming in and we want to see at least two active wallet providers in the pilot we want to see at least one thousand registered users but so these are things we thought of what is it that we want to see in the pilot so um and i want you can see the slide on the on the on the screen but we actually sat down and think of what is it that we want to see then we also and we set out of that we set out kpis in terms of what will success look like at the end of december so what the timeline we have been through the july august september where we have brought in the equipment we have minted we have tested and now we are in november where the the entities that i indicated this national commercial bank the one commercial bank the bank of jamaica we are now starting to test the we have designed wallets cbdc wallets and we are now about to start the testing of the p2p transfers etc so um in december we'll be assessing the results of the use cases that i indicated earlier and come december 31 we want to announce the pilot completion the pilot scheduled for completion december 2021 and we want to have the national rule out in the first quarter of 2022 so that is what we have been about at bank of jamaica with respect to our experience with cbdc thank you so very much for listening noblett panton thank you so much for sharing the experience in jamaica you're according to your timeline right at the heart of the implementation of your pilot so we really appreciate that you took the time to share with us your experience i am sure many central banks around the world are very eager to hear and know about your implementation and your pilot project and so thank you for taking the opportunity to share that experience today on our webinar on digital currency um we'll come back to you with some questions i'm sure many of the participants have some questions for you uh so thank you i'll let you rest a little bit and we'll come back with some thank you so very much thank you thank you our next speaker is from ricks bank uh actually speakers we have two and they will be sharing their experience with the ekrona retail cbdc project implementation in sweden mr johan schmal holts ekrona pilot division ricks bank will be taking the floor first followed by mr in vtech you both have 20 minutes probably about 10 minutes each you have the floor thank you very much yes thank you very much my name is johan schmal holts and i work at the ekrona pilot division at the ricks bank the central bank of sweden and i'm sitting here with my colleague eam vtech who will continue the presentation with some more technical and security aspects of the ekrona project okay some short background why we are at at the point where we are uh in sweden cash is declining rapidly the usage of cash is declining and we can see that on this survey that we conduct every second year since 2010 in 2010 almost 40 percent of the respondents said that they made the latest payment by using cash and last year in 2020 only about eight percent of respondents said that they used cash when making the latest payment so we have a rapid decline on cash in sweden and that's the background why the ricks bank really started to look into the topic of a retail cbdc and ekrona i would also like to be very clear that there is no decision taken in sweden in in order to to really go forward with an ekrona and i will come back to that later we have a parliamentary inquiry that is looking into this topic and that will take the final decision in this when it comes to the objectives of why why going forward with with the investigating the topic of a retail cbdc it's important for the for the central bank to ensure the continued access to central bank money today we provide cash to the public and in the future we might provide electronic alternative to cash and it's it's also important to have a resilient payment system and when all the payments are electronic in the future we are almost there at the moment it's important that we have a resilient payment system and an alternative to the commercial payment system for example if the card payment system is encountering problems an ekrona retail cbdc might be an alternative and could provide resilience it's also important to to provide innovation and competition to the market and and the more existence of an alternative to the commercial payment infrastructure would mean that we put some pressure and competition on on the market in 2018 the rick's bank decided to establish a separate division at the general secretary at the ekrona pilot division and in 2019 this division conducted a public procurement and Accenture was awarded a contract and as a technical supplier of a potential retail cbdc solution and the general objective of this pilot or proof of concept project is to learn more to to establish experience and learn about the challenges and the opportunities from a technical and from a legal perspective and during last year until february this year we have established a technical solution that is built on a network where we have participants that are operating nodes in this network and in order to be to become a participant you also need to be you need you also need to have access to the real-time gross settlement system of the rick's bank to rick's system and the participants are entitled to order a retail cbdc to be issued by the rick's bank and the rick's bank will then debit their reserve accounts in the rtg system and they will credit the nodes that the participants operate in this network and the participant will will then store a retail cbdc and digital walls in these nodes and the participants might be for example payment service providers and and the general public then have the ability to to request retail cbdc to be to be issued to them and and the participants will then debit their payment accounts and credit electronic wallets which contains the acronas and the the end user the general public is then able to make payments in the acrona between their electronic wallets and they can access these electronic wallets by different payment instruments we have in the first phase of the pilot created a smartwatch solution a card solution and also a mobile app solution and that may get give give the end users access to the electronic wallets each transaction has to be approved by a central function in this network that is called a notary node and the the this notary node validates that the this transaction has not been performed before that it's not a double spawning when it comes to interoperability and standardization we can say that what we have tested in the first phase of the pilot is is transactions within the network and it could be transactions between the the wallets in the acronas but it could also be transactions from for example an acrona wallet to a payee that that only has a payment account and then it will be a more of a traditional FX transaction where the acronas will be exchanged to commercial bank money before the money is deposited at the payment account of the of the payee and and that would also be the case the FX scenario if you if you would like to transfer money from the the acrona network outside to to payment receivers outside the network if you look at the the payments payments within this network it's it's useful to look at what type what kind of money that is circulating in in the network and you can compare it to uniquely identifiable units of value some say tokens it's it's maybe it's more easy to say that and here we have an example where maria has a token worth of 100 and she will she would like to transfer 60 acronas to juan and what will happen then is that the notary node will first validate this transaction and if it's okay by the notary node the 60 acronas will be transferred to juan's participant in in the network and juan's participant then needs to to to validate the authenticity of these of these token and in order to do that juan's participant needs to to look back to all the previous transactions that are associated with his latest transaction back to the to the actual issuance by the ricks bank and if this validation process is okay then the money will be transferred to juan's wallet and 40 acronas will be sent back to maria's wallet in in exchange and we have in february we concluded the first phase of the acrona pilot project and and we have some conclusions from from that project from a technical perspective we can conclude that this technology that is inspired by distributed learning technology and blockchain technology is it's very new it's not it has not been tested before for retail payments and and as mentioned before it's it's it's a potential parallel payment infrastructure to the existing commercial payment infrastructure we have also validated that it's that it's possible to to to to steer the the demand and supply by implemented technical features like interest rate and caps on on on on the acrona so from a technical perspective that is not a big issue it's more like it's more a policy issue yeah and regarding the legal issues we have looked into the different types of money that we have today in in in the society we have cash we have the bank deposits and we have the e-money directive in the european union and and one conclusion is that the the money that is circling the in the acrona network is quite similar to banknotes however if you would like to have interest on a cash like solution that would be quite hard because in sweden cash is not considered to be a legal claim and then you have to really and then you have to really to to construct a new kind of legal instrument if you want to have a cash like solution and also have combined it with interest rates and it's also important to emphasize that the commercial payment infrastructure are are covered by the aml know your customer and encounter terrorist financing legislation and one conclusion it would be very hard for for the central bank to not to follow that kind of of of the framework and and we can also conclude that there is a there is a sharing of data in this solution that might be a a topic for for when it comes to bank secrecy and and and the the the protection of sensitive data personal data and you're looking forward where we are at the moment we have concluded the first phase of the of the pilot project and we have we are in the middle of the second phase and what is at the moment we are deciding whether to extend this product for another year in a third phase and we are also looking looking into the preparations regarding potential future procurement because we have this parliamentary inquiry which I mentioned and the politicians will then give us a report in november next year and this report will really be decisive for for the future of the the act on a pilot project. Okay thank you very much I think I stopped here and I will leave the word to my colleague Ian. So I will talk about some insights on retail central bank to the currency in the Inkruna pilot and I will talk about I will be more much more technical because we are running a prototype and trying to develop a prototype and so we can be more more technical. I hope you can if you have any questions you can reach out to me afterwards we'll talk about token selection performance impacts and the privacy and operational security challenges and my name is Ian Littek I have a technical background and the last two years I've been working with everything regarding security within the Inkruna project. So what is backchain and why do Korda work and how to exploit and bad implementation so we are using Korda we started with Korda 4.5 and now running 4.8 actually so if a payment service provider wants to have Inkruna the payment service provider asks for an issue and for in this example 1000 so from nothing we create a transaction I call the transaction one here in this example and it creates one token that's owned by the payment service provider that's very simple but then user A wants to have 200 on the same payment service provider then the Korda will lock we find the token lock it and create a new transaction and create a new token with 200 that says user A owns it and it has a reference back to the old but it also some change here so actually the payment service provider makes it own change of 800 and reference it back and then the lock is removed and the token the first token is stamped but if user A wants to send user B 50 it's the same thing it's will just create a new transaction create a new token of 50 and the user will actually create its own change of 150 so so how to exploit this is if user A repeats like it makes a withdrawal of three and deposit of two over and over again it will be lots of many small tokens owned by different parties here and if user A then deposits all token to the payment service provider then payment service provider owns all these tokens if an administrator wants to redeem everything we give it back to the rick's bank and and have a crooner instead you can see the problem here it could be some performance issues here when all these tokens is going to be redeemed and checked so to to exploit this better you can you can make lots of withdrawals split up all the tokens merge them together again and do this over and over again so you have a very long and complex backchain and this this backchain is needed to verify the actual tokens and i call this you can create an token that's that is a transaction of death and what can you do with this transaction of death yeah you can you can crash corda nodes so what you do is you take this this transaction of death that the user A has and sends it to user C as a totally new payment service provider some here in the process that this token transaction of death will be recorded in the notary but there will be crashes because it can't handle this very complex backchain and it can be inconsistency it's here where where the database think there are there the tokens available but maybe the the the notary says it's it's been spanned and so that's some performance impacts that we have found during this this building this prototype i also want to say something about the private issues that we have found it's as i explained earlier i want to point out to be able when payment service provider 2 receives this token number 3 it want to of course validate the authenticity of the of the of the token it is it actually central bank money so to do that the payment service provider 2 need all these all these transactions that's and tokens that's in in this red frame so when the the payment service provider 2 gets all these tokens and transactions the payment service provider 2 corda node can verify this is money issue from the rick's bank so to explain it a little bit more so i am a evil administrator of payment service provider 2 i'm not i'm not that evil but if i am an evil administrator i have a user h on my my my corda node that just received 60 from user a from psb1 the corda node of psb2 yes we'll see that but it's signed by by user a and and actually we want to see the the back chain where where does this this money comes from so the the corda node will ask payment service provider one where where do this money come from well 50 comes from payment service provider one user g and maybe 20 from user c at psb3 but we have to make it all we have to have all the tokens from the issuing so we we have to have more more information so we get all all of the back chains from all the issuing when we get the last uh if uh transaction then we can validate it but i don't know if you can see my arrow yeah you can do you can see that but if if any user at payment service provider 2 has for in this example made any transaction with user c at payment service provider 3 uh 3 then we can we as an administrator of payment service provider 2 can see that this user c had done a withdrawal of 150 and and done the payment of 75 and is this is this bank Swedish bank secrecy regulation bank secrecy regulation or gdpr compliance that's up to the lawyers but it's an issue that we have to to to think of so in the practical example you have to extract the back chain get the transactions you do some data mining and visualize it and you can you can get any you can i just created a picture like this i'm a payment service provider 2 but i can from only data on payment service provider 2 i can see that the rick's bank had done an issue or two of the payment service provider one one user payment service provider 1 with this wallet address has done a withdrawal and then paid another user payment service provider 3 and then i got that payment but i get all lots of other information also so of course we need to be compliant with european general data protection protection regulation as Swedish bank secrecy regulation but i want i'm i'm i'm i handle all type of security and of course all type of security has to be handled uh performance and authenticity of the digital currency as i explained long back chains and many tokens has to be sold before going into into production uh with a token based retail central bank deal currency and we have a also run into problems with what we call a concert scenario it's like 50 000 people paying to just one wallet like 50 000 tokens right now it's hard coded in Florida that you can just have a transaction with 10 000 tokens so we have to solve that but maybe it doesn't matter uh high availability of course and in in memory token selection and how to do maintenance without disruption how can you patch the operating system without shutting down the payment system and we have some crashes that created inconsistency in the databases and it's it's very bad and and then how do you restore what's called going back to the two-hour this also recovery and return to operations return to operations how do you do that when you have signed transactions i i know how to do a restore of a database but all the signed transactions you can't you can't just go into a field and just enter a balance you need all that those the signed transaction and put them into the database so you need to have like a transaction database and outcome into that but everything else also has to be with information security to security law regulation financing clients i'm 30 seconds over and the non-repudiation and uh is there anything called secure offline i just i when i get presented of secure offline most of the solutions are just signed uh ios so of course there are many solutions change snipping chip pinkie rotation zero knowledge proof and other encryption and there are also we can maybe using validating neutrinos for offline hardware wallets and and uh maybe there are some restore procedures or functions correcting inconsistent database inconsistencies but i really want to have for every solution presented there is an that can be an impact of performance and all other requirements that's needed uh that we to to to get to get this retail central bank to the currency has to be fulfilled of course so of course there may be one solution that would maybe break some other requirements that we have so uh the rick's bank is now experimenting with other designs and we'll also look at other technologies uh thank you for attending that's uh was my presentation thank you thank you very much uh in and uh johan for sharing with us the pilot in rick's tank in in sweden very much appreciated ladies and gentlemen we're a little bit over time so we won't have a lot of time for questions uh what they would suggest is that i have one question to all the panelists and that question is the following um what technical standards would help central banks in implementing retail cbdc and i would like to perhaps start with peter so peter if you could turn on your camera and maybe try to answer that question and i'll go to novellet and then back to you johan and anine so do we have peter online uh peter you're on mute if you could unmute your line please you do but the line just broke up so i couldn't hear you okay let me repeat we we just have time for one question the same question to all the panelists and the question is the following what technical standards would help central banks in implementing retail cbdc um i think that the especially central bank um technical standards for the interfaces in particular to guarantee um interoperability and um privacy at the interface level would be hugely um helpful because central banks themselves do not have control over the interfaces but want interfaces that are interoperable and that assure privacy security and interoperability thank you very clear very concise thank you very much peter um novellet phantom if you could turn on your camera yes thanks thank you well similar to peter i think into the standard that's going to be very important is interoperability and they we have to look at the payment the most modern payment standard and at this point the iso 2022 i think is very important at central banks i know implementing this right across your payment system because that will what will facilitate the interoperability at the highest level so we need to get all the payment system right up to speed in terms of the latest standard and which is the for payment system is the iso 2022 right now that would just make quick quick response to that fantastic thank you thank you very much let's move now to johan and ian uh same question around standards yeah thank you very much yeah standardization is is always difficult when you're entering new territory and and from a from a national perspective if you look at the retail cbdc as a pure national service i think that is not rocket science i think that that is that is possible to create interoperability and based on some kind of standard if it's iso 2022 or if it's just some kind of agreement that you that you populate a certain element in a payment message with with some information that information will tell for example the the receiving pay psp that this is a retail cbdc payment i mean but i think it's more difficult on an international level if you will look to create standardization and interoperability and and then it's gets gets more complicated and from my perspective one one major step would be to to to to to enable the rtg systems worldwide operated by central bank to handle instant payments and also to be open 24 7 then we have a good foundation for for improvements here here and this is a small step but it could be a good first step thank you ian no no i don't want to say anything okay all right thank you very much so ladies and gentlemen i'd like to thank all the panelists for part and the participants for joining today's webinar i'd like to mention that the event was recorded and that the recording of the webinar will be available on the event website um a little later for those who either missed the event or had to leave a bit early i was to invite you all to the next episode on the 23rd of November at 4 p.m. Geneva time where we will discuss the design of wholesale central bank digital currencies i'd like to also take this opportunity to inform you about the upcoming dc3 conference from cryptocurrencies to cbdcs which will be held online from 25 to 27 january next year 2022 and will highlight the work of the digital currency global initiative as well as emerging industry trends and initiatives in digital currencies in particular with regards to one sharing insights on the latest trends in central bank digital currency cryptocurrency and stablecoins two discussing emerging developments and areas where technical standards are needed for the architecture and interoperability of digital currencies and their integration with existing payment systems and three fostering dialogue among digital currency ecosystem stakeholders and regulators on key lessons learned from digital currency pilot implementations the three-day conference will consist of one three thematic tracks on central bank digital currencies stablecoins and security respectively three deep dive sessions on interoperability for central bank digital currency implementation interoperability for stablecoins and security validation model for digital currency systems respectively and three high level panel discussions on topics such as the efficiencies that stablecoin can bring to financial inclusion and to payment systems architecture models for cbdc and stablecoin implementation definition of a digital currency ontology model and security assurance for digital currency systems amongst others i wish everyone a nice day evening or night and i declare this webinar closed thank you very much