 Daniela, and I can start the I started it's gonna take just a couple of seconds and you should be ready to go beautiful go ahead Yeah So two things before we start it is welcome welcome Well, maybe three things one is the hyper ledger Antitrust I mean it is Linux foundation antitrust policy. You have to obey that wherever you are logging in from second is the code of conduct so basically it means that we should be We should not be disagreeable even when we are disagreeing or You know respect the speaker respect the time of others The third thing is of course welcome socket for socket Sinha global VP FSS blockchain it was in the thick of things obviously as the Global VP who's representing in IBM on most of these interesting topics, especially CBDCs because Governments trust Trust big companies like IBM and I am Sure, he'll have a lot of interesting things to tell us about the opera the opera rationalizing of CBDCs Thank you and over to you socket Thank you. We've been good morning everyone. This is a socket Sinha here. I work for IBM lead. I FS is blockchain solution The today's topic is about central bank digital currencies and all of us in our lifetime. We are seeing a Remarkable Development innovation you name it anything right completely transform the way we will experience Financial services going forward in future We are seeing a change happen a transformative change happen across Our society our industries of a government the way we we we come to appreciate money and the way The the the color of money or even the form of money will is changing right in front of our eyes We have been fortunate from IBM I personally myself in many cases that we are in the forefront of Seeing this transformative change and in many cases directly involved with multiple banks and central banks across the globe as They are contemplating to see how to absorb and consume This plethora of change and and innovation that is that is coming from all all facets of of technology as well as as the society We have for many of you who have been close to blockchain and cryptocurrencies and you know central bank digital currencies stable coins There has been a lot of I would say Newsworthy items optics noise for the last so many years right in the name of digital currencies And it is only now that we are seeing that some facets of digital currencies taking taking Final shape In terms of how they will be launched and how they will start transforming the Inherent financial infrastructure within the countries where they are being launched There are many reasons for central banks to play this kind of notice to this technology as we all know a new form of currency rapidly Getting value Attached with it. Definitely has a huge impact on on the economies of the country as well as the the The same orage as well as The fiduciary responsibility of central bank. What we are going to do today into a small presentation here is talk about The the challenges and risks that central banks are facing the decision-making criterias that they are going through in terms of Putting up a structure to operationalize central bank digital currencies Believe me, it's not just a technology challenge more so than the technology the challenges are on the model in which these Digital currencies can be launched and issued as well as operationalizing them from a business perspective Technology perspective and of course the operational run perspective And and the considerations are real and serious Because there's no stepping back once you you move in a direction and you allow a section of your economy to transact and get dependent on this Decisions you make today will have far bearing consequences down the path. And so everybody is careful Yes, there are a lot of cool things that can happen here But at the same time there are a lot of uncool things that can go wrong for which many central banks are Paying special attention. So we have many central banks who are watching Many central banks who are thinking and and some central banks that are forging ahead But they're forging in a very calculated manner. They are they're forging in a way that they are touching it experiencing it as well as Understanding the implications deliberating the decisions so that you know in their in their goodwill and faith They are trying to make all the right decisions so that tomorrow they don't have to pay the price of blunder So what this presentation is going to talk to you about is basically very briefly talk What's happening with central bank digital currencies? And then we'll straight away dive into some business technology and operational considerations as we see them And later we'll have you know open floor for some question answers that you can ask me directly I'm not deliberately using any names of any central bank here So these are extracted information based on my own personal experience and discussions That have been having with and my team has been having with central banks So you'll not see any name. Yeah I might refer them verbally where we are allowed to but believe me There are many central banks out there doing work and and and progressing this But they're not yet open in the market in terms of announcement or anything of that sort But let's dive into it very quickly Oh As many of you know with the amount of news coming out, right? We are our industry of financial service industry has truly reached an inflection point We know that even in u.s. Perspective, you know, occ has allowed financial institutions to become Digital custodians for example and issue their own stablecoin and use public blockchain network for financial services. That's a huge position From where we were just a year back, right and and that is opening up a pendora box I would say in terms of Every financial institution worth its name trying to understand how they will leverage or how they will be impacted by The the onset of digital currencies and cryptocurrencies in the market At the same time since the advent of blockchain The banking industry has not been silent. They have been doing proof of concept pilots projects Each pilot project proving a point in terms of how blockchain technology can be used And that's why we say we are an inflection point because You know, we are we are seeing a change happen And this change is not only for experiment. This change is for grabbing the landscape in terms of opportunities as well as market share to for for the competitive advantage What we are also seeing especially in the capital market that the entire capital market infrastructure Is getting upended in terms of you know with the use of blockchain It's almost like a new internet or a new underpinning fabric of technology Will drive the capital market functioning Who will survive who will get disemediated and how they will the market infrastructure will get replumbed? I would say Is time will tell but that's where everybody's mind is headed to in terms of how They are seeing the change hit them and and trying to accommodate those change in their in their own cycle of innovation What's changing rapidly? Just between last year and this year Never in the history. I think we have seen such a dramatic impact of something appreciating value, especially cryptos We are at two trillion around two trillion of of valuation and market size Of the cryptos, but it's not about the appreciation of value of the crypto itself Right, it is it is it is the derivatives that form gets formed in the capital market that is truly driving The the attention Two trillion for example is the net value, but people who have who have accumulated that value You know the the entire derivative around that in terms of how that value can how you can create liquidity for that value How you can borrow against that how you can lend against that how you can stake to own interest All of those things are creating the secondary market the derivatives market and and people are investing now very fast in terms of Looking at how how to extract value from this efficient the past appreciating cryptos an entirely new asset class has come up as we all know The biggest solution as we see across our market is in the form of digital custody You know many financial institutions are looking at ways of how they will have to provide or will provide a digital custodian solution at the same time you know solutions in terms of Operating between different cryptos exchange of values between different cryptos using it as a payment mechanism use it as a transaction mechanism is coming up Decentralized finance amount of value that is locked getting locked up in for enabling decentralized finance is increasing And so it's giving birth to a new capital market infrastructure The players are still there from a broker dealer perspective, you know share transfer agents perspective stock market performance perspective, but at the same time Many intermediaries Are looking at ways of how they will remain relevant in in the in the new system and not be disimmediated It is upending traditional intermediaries as we speak And this will have huge impact. It's a huge impact on the entire market stability financial market stability as well as the financial system that runs inside a country and right now The government as well as the central bank and the watchdogs had had control and have control in terms of the financial systems But it's it's it can be threatened. It can be threatened from variety of perspective, you know from from an attack perspective or from liquidity perspective And that's where the mindsets are working from central bank perspective the how to save god The system that drives the the the brain power of the chunk of the economy So why are central banks interested in cptcs? We know about Many of these that you would have read I will not go into too much of the detail But there are four major factors where the mindset is right now and this is across multiple central banks that you know, we interviewed and we Discuss with them definitely it's around the currency currency issuance and management if If central bank have to issue a digital currency issuance and management is there, you know fiduciary right and that's something that They want to see how it will happen in the new digital world The stability of the monetary fiscal and monetary and fiscal policies Of course the second most important part came in clearinghouse Many banks in many countries and central banks have invested huge amount of money to have Something like real-time gross settlement systems for cross-border trade and others In the in the advent of digital currency, how would that impact those massive infrastructures that are out there? Whether you should leverage them whether you should have a new way of cross-border payment and settlement That has a huge impact on the entire payment infrastructure of the country and of course financial stability and the regulation I would say that in terms of financial stability and regulation. That's again a responsibility of a central bank But on the regulation side things are still emerging while many governments and central banks have defined policies and framework but The basic tenets of those policy and framework is I would say is just has just touched the challenges that would originate In the issuance and management of central bank digital currency Many policies are still being looked many policies are still being discussed and drafted as we speak and it will be only become clearer when large-scale adoption of these You know these kind of central bank digital currencies starts taking hold and and they will come forth Because right now most regulators are are wondering in terms of you know, what even those basic Regulatory framework should look like to to provide that level of control and level of accessibility to monitor this these kind of mechanism going forward And so we know that central bank digital currencies comes in two flavor one in retail and one in wholesale In our experience as we touch multiple central bank 90 percent of the central banks right now focused on the wholesale side of central bank digital currencies Which is basically a scriptural money that a bunch of bank and a central bank can agree and create It could be a stable coin as well or Or any kind of a token-based money or anything that they can create to deal among themselves And whereas in some central bank, they are interested and they are exploring the retail side of it Which is actually issuing a fiduciary money that can be used by everyone including consumers to do to do transactions There are more challenges on the retail side than on the wholesale side Most of the wholesale side examples that we are seeing involves as I said An aligned member of group of banks coming together and creating A mechanism through which they can do for example issuance of bond or for example settlement of securities And things like that on the retail side the biggest challenge is about the the ability of the central bank to have full visibility of the retail central Retail digital bank center currency and the distribution and issuance of those currency in terms of how it will be tracked The anonymity the privacy and and whole bunch of issues that are coming with that which is posing its own challenges We'll talk about these as we go into the into the discussion later Many What are the central banks aiming for in the perfect world? Right? It's about sovereignty. We talked about that regulatory standard transparency Avoiding parallel economy. This is a biggest mind I would say share in there in from their point of view that they are worried about If adoption of these kind of mechanism a central bank digital currency retail or wholesale Would create or give birth to parallel economies right where fraud or Black market or you know shrinkages of cash would lead to other kind of consequences that they are trying to investigate and understand Of course risk management mitigation and overall liquidity Many times we know that availability of liquidity is good for the smooth functioning of the financial market But if you have more liquidity, it also creates another set of problems In terms of leverage and in terms of derivatives that are based on those liquidity which inflates The secondary market that you want to you want to control so that you don't get over leverage from that point of view So those kind of things and what kind of constructs are needed to manage liquidity And and fluid fluidness of those liquidity Is under consideration as we as we talk about from a blockchain perspective The the gravitation toward blockchain as a technology was Uh, I think was a was a was a perfect as example for central banks to consider them just because with blockchain the three fundamental things that that becomes inevitable and becomes available is about the truth trust and transparency of the available informations transactions data And and things like and things like that immutability and the finality of transactions and others So it was natural for central bank as digital currency is coming up on blockchain I mean the motivation with blockchain and and exploration of this technology for issuance of central of cbdc's You know In all the four key criterias on currencies to management monetary stability payment clearinghouse financial stability and regulations They are looking at the the the use of this technology from from variety of perspective Uh Where many central banks have set up sandboxes for example to test the regulatory framework And also the technology in terms of its performance in terms of its usage They are trying to bring them together in and combine them with their existing payment infrastructure Which is which is uh sort of you know Decentralized in operation but centralized in terms of a command and control And they're trying to bring in the concept of blockchain within within that context and then As central bank digital currencies take shape If one type of currency takes shapes and one kind of value gets associated with that currency There are others that can that can take shape as well. So how do we allow? Settlement how do we allow interoperability? How do we allow exchange of value? That's where atomic settlement type of examples are being used on blockchain And then of course the digital currency issuance itself like what what protocol what framework should we use to issue the digital currency? we For an example, we are working with one central bank right now and they have been going with permission Blockchain network for a for a long long time And and have done project across multiple available DLT's technology and protocols And they're gravitating toward using A more of a public blockchain network for for a reason and the reason is that They they don't want to get involved in managing You know a private network for example from an infrastructure perspective Something that is already readily available. They're thinking of using that as a really available infrastructure And then they are also looking at not investing and developing their own wallet Or other kind of technology and they're looking at the industry and the ecosystem to come up with those solutions That would make it seamless any wallet Or various types of competitive wallet that can exist there to allow for For the transactions to happen That was a change for us because we thought central banks probably most probably will go with With a private permissioned network so that they can have better control and and better visibility And and better dependency in terms of you know, ensuring the the strength of the infrastructure and other things But but here is a central bank that is looking at a public Blockchain network to to to leverage and utilize and trying to investigate in terms of how they can save god The the the financial system that they they will build on top of those kind of infrastructure So in terms of current activities as we see central banks across the globe Doing work in this space. As I said, there are many in the discovery phase They're still creating strategy and roadmap discussion paper called for experiments and things like that There are many in experimental stage where they have built pilot sandboxes And and and then there are some that are reaching I would say operational state Nobody has yet gone into full large scale production. There are limited productions out there Or a limited proof of concept and pilots that are running in production, which the transaction is happening But a large scale full-fledged deployment is still, you know, it's not it's not there But in each of these cases, right? Whether they are in different phases of where they are in their journey in discovery experimental or operational There are a bunch of questions that That they are asked and the nature of the questions that they have changes based on where where they are in their journey But it's not easy It's not easy to just build something and and launch it and and do it with a project plan of, you know Whatever six months nine months, you know, two-year kind of project plan the nature of the questions are proving they they require dialogue they require Decisions and discussions among not only with the central bankers, but the whole financial system The government as well as a lot depends on the political and and the socio-economical makeup of of the country And the central banking question and the relative importance that they view Themself as they as they are part of the global economy So those questions Shape in terms of how fast a central bank actually will move from a discovery stage to experiment to operational What we are finding time and again is that while Most central banks I would say right now Are in the discovery kind of a phase The questions that they have and as this knowledge becomes pervasive in terms of what others have experienced What others have made decision on They are You know, they are in the stage of getting into experiment So this year and the year next we will see more and more central banks announce or or get into experiments With the established framework for for the joint development and and innovation around the central bank these two currencies What are central banks most worried about as we and of all the things that are out there This is just a net net of things where we see most conversations happen Which is the first and foremost in regulatory policy and government risk and compliance gaps Around tokenized clearing and settlement digital asset custody automated governance risk and compliance real-time payment and financial crime As I was mentioning earlier many of these policies are still taking shape. They are they are not yet fully vetted They are not even defined or not even contemplated in terms of what those policies might look like It is coming slowly Some are actively working on it. Some are watching others what they are doing and are a follower But this is something that most central banks are first and foremost worried about the second worry is on the technology side Which is around security of the infrastructure real-time visibility surveillance cash flow forecasting And the use of infrastructure public and private network Biggest question that has been asked around by central banks are that hey If if my infrastructure is attacked and I have a huge portion of my transactions dependent on that what happens How do we protect against that? You know natural disaster or war or anything of that sort right or Those kind of things that that comes up in there and then the fiduciary gap central bank plays a role So in that role, they want to make sure that they have enough of market consensus The asset value that they are responsible for is always protected and the economic threat that they will That they will face from concentration and run on cbdcs Those can be avoided from a from a from an operational perspective. So these three are most challenging questions that banks are central banks are worried about and that's where I would say most of the think tank goes in and the experiments that they call out or the pilots that they invite rfps for Those are invariably trying to address some of these concerns and come to some decision point that they can either become a policy or Or they can become a part of the solution Key stakeholders if we look at central banks, so we know we have central bank issuer regulator consumers financial institutions and and and identity providers the Today for example and why identity provider today for example if a bank issues have a fiat currency a note, you know It doesn't need an identity there right the fiat currency itself is a guaranteed value to whatever extent guaranteed by the bank in tomorrow's digital currency wall The the value of credentials value of identity is humongous in terms of both public and commercial entities to have that identity For their usage and for their participation in the in the currency Central bank are not in the role of being an identity provider today. So tomorrow Whether there will be a third party or there will be a natural extension of a central bank acting as an identity provider Or some other government or public or semi public entity That's again a big question that is being investigated as we as we work with this kind of solutions But it is an important part, uh, you know that credential and it's not only about credential identifying who I am In the digital world as we all know it's about the private and public key management So who would actually provide or perform? That kind of key management and whose responsibility would it would be an accountable for Whether it's a single entity or a combination of entity that something is again a discussion for the market and the consensus around in the market Let's look at some key considerations again here. What we will cover here are some top of the line Things that have come up in a recent conversation of past. I would say one and a half year or so They will not cover the entire breadth and depth of their many considerations as such But these are something that where we spend most of the time in terms of and we are seeing banks spend most of the time in terms of answering If you look at our experience and our visible experiences announced or not knowledge in the market, you know, we have built a solution wholesale Currency first interbank settlement in middle east called our currency between the governments of south arabia united arab Emirates We are working with a large central bank in terms of creating a fiat-based stablecoin And running a variety of experiment on security settlement with that thing. We are working with a retail Central bank digital currencies in terms of creating the policy and framework for issuance of retail central bank digital currencies In a particular market and in a smaller capacity and other places We are consulting with a lot of central banks in terms of the policy making and risk and risk and compliance driven work Around which the frameworks are defined and set up the framework even experiment with central bank digital currencies are are being defined The technology decisions are being made and participation Decisions are being made or who will participate in what capacity those kind of things are being done. So You're very much thick and thin in the conversation. And and that's what i'm bubbling up here for for discussion and sharing with you So if you look at business model considerations, you know, the first thing that comes up is the account type In terms of you know, the the the central bank digital currency itself Whether they will be account based or or token based of course in most of the wholesale Side of the central bank digital currency are account based and and that's an acceptable format That everyone would need to have an account and and and there will be an account based central bank digital currencies And the retail side, of course, there is a token based but it is interchangeable If you think of a of a solution a central bank is trying to launch where they are using both a cash side and an asset side Use case like a bond issuance with a cash issued by central bank digital currency Or cvdc then these account types and account types would be interchangeable and you need to factor in ability for You know for protocol to protocol or one protocol to different protocol interoperability between the exchange of values It's not only about exchange of values about exchange of consensus mechanism that would exist in different protocols So that's one Considerations that is coming up Of course Some central banks have used one type of protocol to keep it simple for both account based and token based whereas some Looking at different protocols to keep account based on one protocol and token based on another protocol The distribution of a central bank digital currency So if you think from a central bank perspective, you know, if they are in the business of issuing The the the digital currency What's the mechanism of that distribution and we are looking at different types of model? In few cases central banks are thinking about issuing it themselves But at least in experimental stages in other cases, they're working with market participants to have a licensed fire commercial bank issue Issue this cvdc is whether central bank will provide the fiduciary and oversight in terms of managing What they can issue and how much they can issue and in what format they can issue So there's a two tier model in which a central bank then allows a licensed fire commercial bank to issue Those will go to individuals and corporates and where the transactions and use cases will be enabled Or in some cases central banks are looking at directly issuing those those currencies to facilitate the transactions and facilitate transfer the key question here from a central bank perspective is that since Of course, they are in the business of issuing paper-based money and managing the entire operation from the sanerage and other kind of factors but in the management of a digital currency their added implications of security infrastructure and technology and operation and and that's something that central banks today are not geared from design principle of managing and being a technology Infrastructure management operation. So third party will have to be involved And how would that third party be controlled and licensed and monitored is again a big questions and deliberation that's happening in central bank The other Question comes about is on the coverage side, you know as cvdc's it will be accessible to different set of entities including consumers and businesses and others How would anonymity be maintained in that? like The the the principle of cash transactions is that you know if you have cash there is a degree of anonymity in it and and they would like to have that level Same feature set available in the currency in the digital currency itself So zero knowledge proof protocol is is a is a big thing that comes into into discussion So that that level of anonymity similar to cash transaction can be maintained in the in the digital currency transaction But again, there are deliberations and discussions here right there deliberation discussions, for example A central bank that is in the business of you know dropping helicopter money or creating stimulus in our fiscal package for reviving its economy Would like to see if it is done using digital currency For example, then the traceability of that whether that fiscal stimulus really went to stimulate the economy or went to other You know non productive purposes And and that kind of measurement and metrics they would like to understand and check If you look at example in china, for example, the yuan based currency that is being launched each individual yuan there can be traced Right from the moment of its creation and right to the moment of its You know usage and consumption and burning and whatever so the entire path can be traced And that's powerful That's powerful to understand how the money is being really used and oiling the economy as well as whether it is for productive purposes or non productive and nefarious purposes things like that And but but the but the level of coverage from an anonymity perspective is a big is a big question that is being answered as we as we as we speak Then the question comes about the privacy Again, this is a big part of the discussion itself. It's it's The privacy comes with a trade-off on performance if you have too many privacy checks and technology to You know get into transaction graph or transaction detail The trade-off is on the performance And and to what extent this privacy should be auditable To preserve the asset management or the asset itself and having that level of Scrutiny on the on the asset right that's something that is being discussed as well Right from account level to transaction Whether it is a you know one to one one too many peer to peer or one too many too many The audit part is something that central banks are deliberating in terms of to what level they would have that auditable feature Enabled as in the solution as as as these things are launched in the market The other one is on control As we all know today central banks are basically in the process of you know They have the control in terms of how much money is being printed tomorrow How much currency will be issued again? There will be they will like to have that control to oversee system and set the cvdc supply And can up and and lower the the availability of that kind of currency for For for interacting with the with the economy and others Again, the question here then becomes is that as these currencies are used in transactions and again You know from a derivative and leverage market if leverage has been built on that How how would visibility be created to determine if there's an oversupply or under supply? And and would there be a policy in place to guard against? Uh, you know some central banks are going far ahead in terms of oversupplying and creating a lot of liquidity to show That the economy is humming and booming. Whereas, you know, there could be a challenge of that These are again, uh, you know longer term conversations And the value of that particular digital currency even though it's backed by fiat Is it is it really backed by the by the fiat and Based on the monetary policies of the of the of the country or Or would that value depreciate? Or it will also lead to depreciation of the fiat itself You know as if there is an overrun on central bank digital currencies in in the transaction So that kind of control mechanism To establish to provide the trust to provide the level of confidence in central bank digital currencies That's something is again part of big discussions with central banks Last but not least we have this social business social considerations in the business models Which is basically the stability of the value the Means of payment for for an including financial inclusion within the country consumer protection at the store of value security and resource allocation And bringing the overall level of trust in the integrity financial stability Monetary policy and effectiveness, right? So these are things that Being part of the discussion as policies are being written To satisfy many of the social criteria as we as to speak here The interaction of the business model is again another part that is coming up If you look at central banks Digital currencies, you know, there is a central bank the fi bank that non banking financial institutions You can't exclude them because they play an important role in your in your economy and then there would be some exchanges The interaction model is typically being discussed as we speak is whether there should be only one financial institution that interacting with cbdc So one type of financial institutions Or the cbdc is available to banks and non banking financial institutions only Or cbdc is available to entire economy to interact with it, right? The level of breadth in which the cbdc is will be made available Nobody has yet reached a conclusion that it should be made available to the entire economy Everybody's got it because they they want to watch and see how these things span out So most one and two are the most obvious Field of experiment as as we speak now But at some point of time if these two succeed in a way from a policy and regulation perspective then More and more aspects and the sphere of economic economic activity will become part of it Let's quickly look at some technology considerations We'll take a look at ecosystem decentralized credentials and these are again the top top bubbled up Considerations that where challenges and solutions are being worked on and discussed more and more as central banks are experimenting with Or taking thinking about launching central bank digital currency From an ecosystem participation, you know, there is a general belief in central bank with central banks that they Primarily the role they will place will be similar to that of a fiat currency issuance and management They will create policies create the framework and use public private participation to to then Make this solution pervasive It wouldn't be financial system So as such the framework that they are building if you think about this from a central bank disciplines is they are building a framework where The technology will provide the interface technology will hold on one second Technology will provide the interface for various applications to interact with the framework various compliance platform to interact with the framework And then the entities in terms of bank broker custody or you name it Broker dealer whoever is there will interact with the interact with the platform. So it will be kind of an open Open architecture And this is something that Has come and it will only allow more and more participation and if something is successful then it will create a scale Around which it can be very quickly expanded with with external participation So leading central banks, I would say who are far ahead in terms of doing and building this kind of technology Beyond experimentation and now focusing on the architecture Where and to make that architecture open to allow for ecosystem participation The the rules of participation the framework in which they will participate the technology They will use they're not dictating specific technology as say But from a security and interaction point of view they are defining those interaction mechanism But this is how the visualization in terms of you know different entities That would come into play will interact with the ecosystem and and increase the participation as need be The other one we talked initially is about the credentials really How how the credentials will actually work we are working with some of our verified credentials running on hyper ledger indy for example in some of the central bank digital currency conversations It is very important aspect as I was mentioning earlier The need for credentials to be part of the system is important because every entity on blockchain Would have that that credential which is interacting with digital currency So apart from a blockchain network a payment network You will need an identity network on the same chain or in the side chain But where that credential information would be supreme in terms of how How you will interact and how you will have the privilege and the rights Depending on what role you are going to play in the market infrastructure The other important factor is interoperability interoperability not only from Within the country's solution like you know within different protocols Or different blockchain networks that on which solutions are built But also interoperability from cross country cross border perspective Right, so if one region in certain of the world is has built something on ethereum For example other region has built something on hyper ledger for example If you want to connect the economic corridor For trade then you know what kind of interoperability will come in right now Majority of these are based on erc20 interface using cross-gen atomic swap like hdlc support and And a set of interrupt standards for non-crypto digital currencies are being developed in some cases as well Here is an example of atomic swap between an ethereum ledger and an asset hyper ledger ledger And you know in terms of the mechanism in which these kind of Value can be exchanged from a permission cash ledger and the permission asset ledger But it's it's it's a work in progress. It's not something that Has been fully baked in limited capacity. These are working The challenges where it's being discovered or or I would say people are investing time and money and energy is on The scalability the performance The rollback feature for example, you know and the translation of consensus mechanism one protocol with the other protocol to provide that level of Uniqueness the finality of the transaction as it happens between different protocols So interoperability is a big thing And most of the advanced central banks which are working on or have a prototype solution and participation This is the next hurdle on which they are they are working to To have a policy framework as well as a technological considerations for our technology solutions for interoperability And then there is a integration Earlier we saw the picture of how a central bank will provide the framework architecture or Define the framework and architecture in which solution will be built and market participants will interact Then but the protocols around which those integration will happen, you know ranges from full mesh connectivity Access to common services as well as access to the core banking system The access to core banking system of banks is a new one but it is it is coming up very fast as In a couple of a couple of large central banks as we are discussing and looking in those policies Where commercial banks core banking systems would have a way in terms of interacting with the blockchain network itself To such an extent that in one particular case we were thinking about whether you really need a The core in core of the core banking system, which is the general ledger Which you which every different banks or many different banks have their own general ledger and core banking system would that One day be part of or be used From a blockchain perspective that you have the ledger on the blockchain itself Which will be a very transformative and revolutionary change From a bank perspective because core banking infrastructure and payments infrastructure as you know consumes most of the technology cost And if so that shifts to a blockchain Then you know, it will be far revolutionary and and very appealing from a cost and efficiency management point of view The another technology consideration that is discussed most often is the wallet some some central banks are Very particular that they will define the standard and framework for building the wallet Whereas others will others are looking at available wallets in the system You know, most of them are of course it based on ethereum, but there are other wallets as well All they will provide is a rules and sort of policies around which this wallets can become part of the ecosystem But again, they would allow these kind of wallets to exist We will need wallet for retail central bank digital currency. We may need wallet for wholesale as well there's a less and less of usage of examples of a wholesale wallet but on the retail side since only 10 percent of from our experience of central banks are using it Most of the discussions there are as the wallet and the wallet management It's not only about the wallet management But the private key and who will be financially responsible for those private key Whether you should give it ultimately to the consumers Or there will be a way for consumers to recover lost private key and other things those those things are part of the discussion as well offline payment Many payments can happen on blockchain and will happen on blockchain network, but there will be different types of payments that today happens offline world for example And and they will they will happen as well and it's part of the of any any economy any process So traditional techniques like electronic cash devices stored in forward You know, but all of those will need additional policies and regulations and legal enforcement to avoid fraud or or other kinds of financial crime A new technique that we are working with one of the central bank is basically developing a micro payment channel Which will you know require support from the main payment network Using lightning network or like bitcoin for example, bitcoin lightning network or others Even from stellar, but that's an additional consideration that is coming up to support offline payments And then on the privacy side, we have you know considerations to manage privacy We talked about that in this in the business side from the technology side Things like private channels and sub ledgers as a means and mechanism to handle privacy Sidechains where privacy credentials will be maintained in sidechains to interact with the main blockchain network on which central bank digital currency is used Zero knowledge proof again is a big requirement and then lightning network or some kind of a two layer protocol a network on which a participant can commit and commit funds and exchange transactions peer to peer those kind of things Is again a part of experiment. I would say so but everybody knows Everybody recognizes the fact that you will have to have a solution to handle privacy You can't bog down the main network and solution with a privacy protocol on it So the question about you know, whether you should have a sub channel or a sidechain Things like that would come into play and it's coming into play as we as we define the as we define the solution Let's look at some operational considerations As central banks are looking at it, right? They are From just pure operational perspective. We talked about a direct model where they will be issued They will issue the currency themselves maintain and manage the infrastructure Indirect model, which is a participation with other commercial institutions and there could be a hybrid model Of all the central banks that we are working with in the in our universe Two of them I would say are looking at a hybrid model And one of them is still in a direct model kind of a mode But majority of them are in indirect indirect model, right? Where the central bank will create the policy. They're facilitating the experiments and they're working, but they will Use the commercial bank infrastructure and their capability to manage manage the issuance and and those kind of Central bank, sorry cvdc's currencies in there from a From a from the overall operational perspective, if you look at ways in which Things are going on as part of the policy writing of as part of the framework drafting and other things Majority of the efforts are being done on the intrinsic value of the currency itself So whether this new if they issue new digital currency, for example, will it replace existing fiat or it will be in lieu of existing fiat What happens there, right? You can't just create surplus, for example Or or how will you back it up? What will be the impact on inflation? So Exchange value of the fiat to currencies and other things and how would you guarantee the intrinsic value? And and insurance for preserving intrinsic value. So these are tough policy questions on which things are being Discussed and framed and written and debated, right? Many of these have political implications Of the country itself. So they are part of, you know, the financial ministry or the government discussions as well In terms of understanding. So the level of Knowledge and the level or level of understanding the depth Are still maturing and that's where the delay is mostly in terms of white large scale adoption of of central bank digital currencies The the purpose and adoption itself Many countries are still I would say who are in early early stages are still watching others and trying to understand the purpose and adoption of Why central bank digital currency? So there's something there and they have to create different kind of framework like many central banks, for example Don't even have framework for digital digitization or supporting digital document digital signatures and things like that And that's where the challenges because they are not in the process of completely embracing or understanding And a lot of work is being done in that kind of policy framing Identity and ownership who will own the identity and ownership of credentials that come into the network If third parties are owned, how can you protect protect that from being misused? You know, if the account and token based models are used then the credentials of those accounts who will own them and responsible for A big question on architecture From the design point of view the security point of view and more important from the infrastructure point of view So as you use that infrastructure, it's not only about whether using permit. Sorry private Private infrastructure or public infrastructure. It's a question about resiliency scalability and availability right the big question out there is still the fact that if a technical challenge comes up In into the into the existing blockchain network, you know, how would it destabilize the The the important aspect of central bank digital currency and the transactions disaster recovery And one big question that has started emerging is a fail fail proof rollback capabilities So would it be possible to roll back? Of course, you can fork a network and create other things but imagine billions and billions of transactions happening And the time it would take to go back and roll back Transactions for a variety of reasons and then create a new fork. I mean, there are significant technical challenges there itself To manage the architecture and interoperability. We talked about that. It's not only about what you do in your own cocoon it's about creating a system that can not only work within your country but across country for cross border and an interaction and economic activities and participation in trade with other countries as well And then there are considerations in terms of the security technical and performance regulatory and economic And then again, these are part of work that we are doing actively As we speak and as i'm speaking here, we are Helping them write these policies and and framework and answer some of the tough questions And what decisions to be taken? What's the what's the decision-making criteria? If something happens there and then something goes wrong, how would you recover from that? It's not easy. It's it's not easy to completely anticipate what something will happen in future But it is it is important aspect of consideration to write them and and and have that clarity And understanding for the ecosystem to trust that you know things if it goes wrong It can be it can be recovered or it can be it can be brought back to normal and that's where From variety of perspective write the credentials the personal privacy The impact on economy All those things come into play as we as we speak and and write these policies for and expand on these policies Many of the experiments that we are doing and proof of our technology and proof of concept that we are doing those are informing How these policies will become more mature this regulatory framework will become more mature To support the expansion of these kind of concepts into the market And there is a roadmap We we normally encourage central banks to follow a defined roadmap from you know from strict from Initial stage where they are looking at assessment even beginning to delve into it many central banks as I said are still waiting and watching But then there is a so once you have done that and understand this is important aspect You get into the deployment type of it where you think about you know Creating a framework of sandbox test network production network those kind of thing then application development whether you do or you invite commercial vendors and other commercial entities to do to test the Framework and infrastructure and then on the operation side So there is a each each phase I would say takes time each phase is a learning process each phase Most of the organizations are still between the first and the second phase or touching on the third phase Mostly, but many are still in the in the first phase itself And if you have reached a phase of even operation, right? They would reach this phase of application development and testing the some of the operational considerations as we speak Sorry about that. I took a lot of time to Cover that but I thought I gave some of the key considerations as things are happening in the market and in the market and as the central bank discurrency Let me open it up for a question answer and some dialogue and discussion It was a I hope it's not monotonous, you know and things in there Thank you socket for this wonderful overview and of course drilling into some of the operational aspects It's a lot of ground to cover In a short period of time and it's you have done an excellent job I have the feeling that there are a lot of questions, but you know with three minutes remaining I would rather concentrate on you know tanking you and Having a pathway for a future interaction from this group Uh, I mean we can always ask questions right now, but I have a feeling that other people are also waiting to go get To the next session, which is on the same zoom channel So If you have any closing words, that would be uh interesting plus you know, we can If you can create a pathway for interaction that would be also very interesting because Sure, I think that's I didn't realize we were spending so much of time here, but but you know I hope I provided the the context and some of the considerations here I can share this presentation if anybody wants to that's number one reach me out on linkedin and I can I can help connect there and share this and ask me any questions that that that You think and you're encountering in your world right as I said in the beginning. We are living through a A transformation that we'll see only once in our lifetime It's it's it's a great to be part of this and Really happy that you know, the world is thinking and moving in the direction that you know Really really transformative change and we'll redefine the way we will interact with financial services going forward in future So i'm very excited and you know happy to share and provide any other feedback input that Any one of you would like to you know connect me with Thank you saket and um, if you send me the presentation I can also link it from the Uh from the wiki page. That's one thing the second is uh Of course this talk is now available on youtube and I've already uh Put out the link and actually it's thanks to Thanks to daniella and karen for managing that and Once again, thank you for thank you. We've been thanks for the opportunity and great interacting with you guys. Thanks Thank you sake. It was a really complete. Um presentation of of what's happened in this space and really appreciate you sharing