 Thank you. Thank you for having me here. I'm quite excited being invited into such an exciting conference indeed and I well there was a lot of input already. I hope I can add someone as something to that. So what's the subject today? It's the question of the relevance of central bank digital currency in the context of Bitcoin and I start with a headline of the third of January 2009 from the times Chancellor on Brink of second bailout for banks. I don't know if some of you know this headline because it's encrypted in the first block of the Bitcoin blockchain and was written by Satoshi Nakamoto into into this Genesis block which was obviously a big signal to the people that he did not choose very accidentally but he chooses it as a kind of attack on the current banking system which was already under attack indeed in this during this time. So attack on the banking system as well as on as implication on the central bank money. Now many central banks have reacted in a way to the emergence of Bitcoin and of cryptocurrencies. They did a lot of research and are doing still a lot of research in crypto in and not really in cryptocurrencies but in central bank digital currency which is indeed a different thing. They are actively exploring into it. This list is not complete there. You can add quite another dozens to it and it shows okay there is something happening over there and people are at the central banks are aware that something is happening with a payment system and also with the monetary system. Now before going deeper into the question why central banks are bothered, concerned about the central bank digital currency and what is the motivation behind thinking harder about central bank digital currency let's go more into detail what forms of money actually exist and a good approach to do that is to go into the so-called money flower which has been well invented in a way by authors of the Bank of International Settlement and it's a quite good way to to localize where cash is located where central bank digital currency is located where Bitcoin is also located so let's start and explaining this this money flower for example if you take this ellipse of the green one the green one includes all kind of money which has been issued by the central bank all money which is not issued by the central bank is outside this green ellipse the same is true for the blue ellipse all kind of money which takes a digital form is included in this ellipse all kind of money which is not digital so it's physical not digital is outside this ellipse and the same is true for the characteristic of being widely accessible all included in the in the red one if it's not widely accessible it's outside or token-based inside outside is account-based so if you take these four characteristics for money then you get to four kinds of central bank digital currencies the most well known in banking banking is this kind of central bank digital currency which already exists it's not widely accessible only but it's digital it's central bank issued obviously and it's not token-based so it's account-based that's the well actually it's a central bank accounts which banks hold at the central bank this central bank digital currency already exists what it does not exist is central bank account for general purpose so widely accessible this is this one this does not exist already but it can exist it can be built up and so central bank accounts with general purpose are widely accessible they are digital and there are central bank issued okay where is cash cash is here cash is token-based it's not digital but it's central bank issued so cash is indeed central bank money where our bank deposits they are outside the central bank issued money because banks are generating this money not the central bank and it's digital in form and widely accessible and whereas Bitcoin Bitcoin is digital is widely accessible is token based but obviously is not central bank issued so it's outside the central bank system okay so let's go back into the question to the question why are central banks thinking about digital forms of central bank money now the Bank of International settlement they thought also hard about it and they thought okay let's ask the central banks they asked indeed 33 central banks and what it's quite interesting that between advanced economies and emerging market economies the priorities are quite different so if you look at it emerging market economies they are quite concerned about payment efficiency and financial inclusion given the fact that for example in many countries around only 40% of people have access to a banking account 60% have not while financial inclusion is not a big issue in advanced economies it's the lowest of priority when they're think about a central bank digital currency okay there are other motives I will not go deeper into it but there is one thing which concerns quite a lot of central banks which is the dwindling use of cash Sweden is one big example where in the year 2018 only 13 out of 100 people have made their latest payments with cash the other payments were all done electronically and this trend which is going downward quite significantly in Sweden but if you look at the global development in China Japan Australia Singapore it's a slightly other measure but the trend is also there that the use of cash in relative terms is going down so what could we expect well Sweden is really thinking hard that maybe there comes a day when the whole society is cashless so where no cash does exist anymore and you may say okay it's fine so we have a cashless society it's very modern very very efficient why bother what be being concerned about it well the point is that if you rely fully on non cash so on on electronic payment then you rely fully on the banking system because cash is the only way you can hold to central bank money and this means in terms of payments and in terms of storing your money if you don't cannot hold cash anymore because society is cashless then you rely in terms of payment and in terms of storage fully on the central bank on the banking sector because every payment is going through the bank the central bank banking system now this is fine as long as the banking system works nobody would complain about it however we know from 2015 from Greece we know from 2012 in Cyprus we know from 2001 in Argentina well Indonesia Turkey Ukraine and you name it there are plenty of examples where the banking system went down the payment system was disrupted and the whole economy was hit quite hard so a way to to avoid this or to make the the system more resilient would be to well add a new payment system in a way where every citizen gets a central bank account so in today's word it's looking like this so if you have a account holder a he has a banking account at a at bank a let's say and if you want to make a transfer to bank account holder B then he must go through the banking system and through the central bank system what you can do to shorten it and to well circumvent the banking sector to you can do it like this so account holder a has a central bank account at the central bank and the counter B has also a central bank account at the central bank and so you don't need the banking sector in this respect which could be good in the case that a banking crisis hit the economy so it doesn't mean that necessarily the banking system does not play any must not play any role in the bank in a payment system but it means that if there is a banking crisis the whole system would be more resilient because you have still redundant double payment system and could rely on it so that the heart of the economy which is the payment system in a way is not destroyed fully now this is one way to think about central bank digital currency to think about it in terms of okay everybody holds a central bank account this would be the equivalent of central bank digital currency and Sweden for example is thinking in this way about this entertainment even though they say well we are not at the state where we will really introduce it now the other question is if a blockchain approach makes sense for central banks to when when they think about central bank digital currency does it make sense to go away from a central bank account or to to structure the central bank account in a blockchain way now let me skip this there are a few trade-offs in the blockchain system which I will go into it so if you think about the left hand which is the most radical solution which is obviously Bitcoin a public decentralized blockchain this is obviously not an alternative for the central bank because it would be contradicting Bitcoin is outside the central bank system so it doesn't make sense to think about it as a central bank issued money however they are if you go to the right many possibilities of structuring the blockchain first it should be permissioned if you want as a central bank manage this blockchain and it could be partly or fully centralized well the big advantage of a centralized blockchain where you have a big big server and or a cloud if you would like so is that in terms of speed and storage capacity you get the maximum so Amazon web service they have a big big server or various big service but but they have the capacity to to offer really high speed and high storage now if you go way back and decentralized the thing and have let's say 1,000 or 10,000 nodes which are actually acting in this blockchain then it would be much more difficult to get the speed and and the storage capacity well the trade-off between speed and storage capacity is the immutability of data if you have all concentrated in all in one blockchain in one central cloud then obviously it's more vulnerable to manipulation or a distraction of data so on the however on the other side on the other side if you have a more decentralized system then obviously the data are more secure because you have so many copies of the data of the transaction that you made on the payment system so if one copy or one blockchain is destroyed you have all the others that still do work now and that's one thing that a few central banks from the Caribbean states have thought about but okay we have a payment system which runs in our island system let's say and these islands are quite vulnerable towards weather conditions so if a hurricane hits one island then the payment system could run out of control or could run down could come down and there would be a disruption how could we encounter it well we could encounter it with a blockchain system where there are various copies and if one system goes down then the other systems still run so for such an event it could make sense to think about a blockchain based central bank digital currency otherwise I would say there is quite a consensus amongst most people who are doing research in central banks that the blockchain system has not yet very strong advantages in comparison to the system that we have today so in kind in terms of speed in terms of storage capacity it's not a system that runs much better or even it does not run better than the current system so there are some central banks who did research in terms of having a blockchain a centralized blockchain for example the central bank of South Africa has done so but they did not take the consequence okay we will switch to this one it could make sense because perhaps the payments are more transparent you can go better into history and so on this maybe maybe an issue but there is no convincing argument for it until now and so what I believe and I will skip this so okay I can go into this because I have still a few minutes so the idea of the blockchain system that the Caribbean islands have thought about it is okay if one is destroyed we have all these copies and so we do not have to worry too much about it or if one blockchain is manipulated then it would disappear and would not be considered anymore but the payment system as a whole would still work because we have all these blockchains which each one has the same copies of the transactions now I think it's it's right now time to make the conclusions so I think that Sandelbank digital currency will remain a hot topic for central banks especially for emerging economies I have the feeling that there the interest for it is is much bigger especially with respect to the the argument of financial inclusion payment efficiency is also playing quite a role Bitcoin obviously is not an alternative for the Sandelbank because it's outside the Sandelbank sphere but in terms of of resilience of a blockchain based system it could be an inspiration small countries are I named the one the Caribbean states with vulnerable payment system there it could make sense to think about the blockchain based Sandelbank digital currency however I think that bigger and more advanced countries and they will or stick to the old system so where banks still play a key role especially if the banking sector has a good track record and has not failed in the past in the in the nearer past or they may introduce Sandelbank digital currency system on a retail basis so that every citizen has a Sandelbank digital currency account so with a with a consequence that there would be an additional payment system which would make the economy more resilient against shocks and finally I think it's important to to say that that the introduction of Sandelbank digital currency should happen quite in a cautious way because the design there are plenty of design possibilities and it depends very much on the design how stable the system at the at the end is and so it's quite good to make pilot projects and so on like Sandelbanks are doing at the moment or many are doing at the moment but I think at the same time that they should be have an open mind toward changes which could be disruptive however at the same time they could be welfare increasing so thank you very much for your attention and I'm happy to discuss with you