 Welcome to the ITU studio in Geneva. I'm very pleased to be joining the studio today by Klaus Loba, who is the chair of the CPMI Working Group on digital innovations. Klaus, welcome to the studio. It's a pleasure to be here. Now I'd like to start off by talking a little bit about we're talking very much We've been talking in the last few days here in the area of digital currency I wanted to find out perhaps you could share your experience in the area of digital currency or central bank digital currency Absolutely, and I'm coming here as a Representative of the Committee on Payments and Market Infrastructures, which is a global standard-selling body of central banks looking at payments clearing and settlement and of course within that sphere means of payments means of exchange a particular area of interest and in the recent years Innovations in particular digital innovations have been at the forefront of a lot of changes that may affect the way Financial transactions or actually everyone's payments are being conducted and Because this is affecting central banks. It's affecting the financial markets is affecting the wider ecosystem The central banks in the CPMI are taking a close look and have established a particular working group on digital innovations to look at these matters and Within the working group. We have been spending particular attention on the implications of digital currencies both private sector and Central Bank issued variants and we actually issued two key reports one looking more at the technology side an analytical framework on distributed ledger and more specifically to our topic a Quite wide-ranging a report on central bank digital currencies Where we look at together with another battle-based body the markets committee at the variety of Affected areas payments monetary policy financial stability that have to be considered by central banks when looking at digital currencies What about issuing digital currency? Why should central banks consider issuing it? well there may be multiple motivations for a central bank to look at this and It's fair to say there is not a uniform driver for this Some central banks are looking at because they have a decline in cash usage in their country other looking at it Because they want to have a more effective means of settlement They may be considering to have a tool to foster financial inclusion or In some instances they're looking at it from a monetary policy perspective have a new tool to implement their monetary policy however, if you look at this of course you need to consider the implications and It's fair to say the implications may be actually quite different depending on what drives you and how you design your Digital currency that is why there's a wide range of topics ranging from Technology to legal to policy that have to be considered and in the CPMI We try to help central banks to have a comprehensive picture of the issues to look at What are the main challenges facing central banks in issuing digital currencies? Well, the basic issue is Currency of course is a core issue of a central bank to issue a sovereign currency is one of their primary tasks and Ultimately to have currency that is stable and efficient is a matter of trust in the central bank so Central banks have to be to the utmost diligent to make sure that they're not creating inadvertently a instability by issuing digital currencies and there's a spectrum of issues to consider Very basic ones relating to technology. Is the technology mature? Is it safe? Are there potential? shortcomings or Exposures to cyber risks. There is the policy dimension actually should a central bank be active here Or rather leave it to the private sector What are the implications of issuing yet another channel for payments? but there are also some much more basic issues if you look at the impact on On The wider economy. How does it interplay? other issues relating financial stability other cross-border implications and lastly There are legal issues to consider because you may have an idea what a Bitcoin is You may have an idea what a central bank issued digital currency is but legally there are a lot of questions around it again I'm not saying that is unsurmountable obstacles But in looking at the issue in trying to understand the consequences and the trade-offs You need to have a full picture of these implications. We've talked about trust We talked about Legality in what areas of digital currency as standards are required for central banks And how do you think that the output of the focus group? You've been involved with the working group that you've been involved with or ITU could help bridge the standards gap that's an excellent question and actually for the Issues where standards are required technology is at the forefront because if Digital currencies are based on propriety solutions There's a risk of creating fragmentation of not allowing for interoperability across different solutions And that is something which would be rather counterintuitive to the intent to integrate markets to foster Connectivities and of course a key aspect here is to have Some foundations standardized technical features and in particular the work of the ITU looking at reference architectures here is for me a Main aspect and a main driver to move the developments in direction Which actually do not come to these? negative impacts of fragmentation but allow for a truly Interconnectable Environment finally just in terms of a timeline. What are we looking at with the five ten years before digital currencies are? All-pervasive that's Another excellent question and to some degree This is looking in the crystal wall What is noticeable is there is a wide degree of attention across central banks? Basically every central bank is looking at issues is trying to experiment is trying to understand the technology When it comes to an actual rollout You are talking probably about time horizons, which are very different from country to country Some countries in public announcement have said they are very closely looking at this and may consider something in the shorter medium term Others have taken a more conservative stance overall It will probably depend on the success on some of the initial rollouts Whether this will be a general feature or whether it will remain a limited test case My expectation is we will see digital currencies and we will also see digital central bank involvement, but the time horizon I would rather not speculate and we'll have to wait and see well class over Thank you very much for joining us in the studio today, and we hopefully will catch up with you again at some stage in The very near future. It was a very pleasure. Thank you. Thank you so much