Report

International Seminar
22 March 2023

Developments in Central Bank Digital

Currencies and issues for consumers
2  DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS

Foreword and Acknowledgements

This document sets out the Agenda, Summary Report and Speaker Biographies for the joint
G20/OECD Task Force on Financial Consumer Protection and FinCoNet International
Seminar on Developments in Central Bank Digital Currencies and issues for consumers,
held on 22 March 2023.
The G20/OECD Task Force on Financial Consumer Protection and FinCoNet would like
to acknowledge and thank everyone who organised and participated in the Seminar, and
particularly all Speakers, Panellists and Moderators for their valuable contribution to the
discussion.

About the G20/OECD Task Force on Financial Consumer Protection

The G20/OECD Task Force on Financial Consumer Protection (“the Task Force”) was
established in 2010 in response to the financial crisis and in recognition of the fact that an
appropriate level of financial consumer protection is an essential requirement to ensuring
consumer trust and confidence in the market. The Task Force is the leading international
forum for the development of financial consumer protection policy and acts as a forum for
the exchange of information and expertise relating to policy developments and emerging
issues across jurisdictions. The Task Force is responsible for the High-Level Principles on
Financial Consumer Protection (“the Principles”), which have been endorsed by G20
Leaders and adopted by the OECD Council, and are included in the Financial Stability
Board Compendium of Standards.

About FinCoNet

In November 2013, International Financial Consumer Protection Organisation (FinCoNet),

was formally established as an international organisation of market conduct supervisory
authorities with responsibility for financial consumer protection. FinCoNet is recognised
by the Financial Stability Board and the G20. The goal of FinCoNet is to promote sound
market conduct and enhance financial consumer protection through efficient and effective
financial market conduct supervision, with a focus on banking and credit. FinCoNet
Members see the organisation as a valuable forum for sharing information on supervisory
tools and best practices. By sharing best practices and by promoting fair and transparent
market practices, FinCoNet aims to strengthen consumer confidence and reduce systemic
consumer risk.

Disclaimer

The opinions expressed in this document do not necessarily reflect the official views of
Task Force Delegates or FinCoNet member organisations.
 DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS 3

Table of Contents

Agenda .................................................................................................................................................... 4
Summary Report – International Seminar ......................................................................................... 5
Opening remarks .................................................................................................................................. 5
Keynote and Panel Discussion: Issues, risks and opportunities of CBDCs for consumers ................. 5
Panel: Jurisdiction updates regarding the development of CBDCs ................................................... 12
Closing remarks ................................................................................................................................. 17
Speaker Biographies............................................................................................................................ 18
4  DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS

Agenda

Developments in Central Bank Digital Currencies and issues for consumers

10.00 – 10.05
Opening remarks

Nisha Arora, Chair of the G20/OECD Task Force on Financial Consumer Protection

10.05 – 11.30
Keynote and Panel Discussion: Issues, risks and opportunities of CBDCs for
consumers
Moderator: Carmine Di Noia, Director for Financial and Enterprise Affairs, OECD
Keynote speaker: Maria Demertzis, Senior Fellow at Bruegel and Professor of Economic Policy at
the School of Transnational Governance at the European University Institute in Florence
Panellists:
• Keith Bear, Fellow at the Centre for Alternative Finance, Judge Business School, University
of Cambridge
• Priscilla Koo Wilkens, Senior Economist, Innovation and Digital Economy Unit, Economic
and Monetary Department, Bank for International Settlements.

11.30 – 12.55
Panel: Jurisdiction updates regarding the development of CBDCs
Moderator: Miles Larbey, Head of Financial Consumer Protection, Education & Inclusion Unit,
DAF
Presenters:
• Stephanie Haffner, Senior Specialist in Central Bank Digital Currencies Unit, Bank of England
• Fabio Araujo, Project Leader of the Digital Brazilian Real Initiative, Banco Central do Brasil
• Rashida Monguno, Director of Consumer Protection Department, Central Bank of Nigeria
• Chris Thompson, Deputy Head of the Payments Policy Department, Reserve Bank of Australia

12.55 – 13.00
Closing Remarks
Chris Green, Chair of FinCoNet
 DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS 5

Summary Report – International Seminar

Developments in Central Bank Digital Currencies and issues for consumers

22 March 2023, 10.00-13.00 CEST

Opening remarks

Ms Nisha Arora, Chair of the G20/OECD Task Force on Financial Consumer Protection
(Task Force) opened the Seminar and welcome in-person and virtual participants.
Ms Arora noted that, as the leading international forum for financial consumer protection
policy and regulation, one of the functions of the Task Force was to bring together policy
makers, public authorities and experts from around the world to discuss and exchange
perspectives on emerging issues and trends that affect consumers around the world.
She further highlighted how digitalisation was transforming all aspects of our economies
and societies, including financial services and was also a strategic priority for the Task
Force, as well as one of three new cross-cutting themes in the recently updated G20/OECD
High-Level Principles on Financial Consumer Protection, which are the international
standard for financial consumer protection frameworks.
Ms Arora noted that the effects of digitalisation on financial consumers could take many
forms, including new types of digital financial products, service and distribution channels,
changes to the way that financial consumers interact with financial services providers or
the impact of AI and machine learning on financial decision-making.
She reminded participants that the Seminar would look at a specific form of digitalisation
– that of fiat currency, in the form of CBDCs – for which the effects on consumers (or
users) were less well understood, given its novelty and the limited number of real-world
examples. Ms Arora noted that many central banks around the world were researching and
developing CBDCs, with significant work taking place at the international level in terms
of analysing the systemic impacts. The Seminar, she noted, would explore these
developments and related issues, but in keeping with the focus of the Task Force and
FinCoNet, with specific attention on the implications for users.
Ms Arora concluded with an overview of the Seminar’s agenda, which she noted would
feature a keynote speaker, a panel discussion and a series of presentations from country
representatives.

Keynote and Panel Discussion: Issues, risks and opportunities of CBDCs for
consumers

Mr Carmine Di Noia, Director for Financial and Enterprise Affairs, OECD thanked the
Chair of the Task Force for her welcoming remarks. Before giving the floor to the keynote
speaker, Mr Di Noia made the following comments:
• Mr Di Noia noted that the OECD Secretariat was progressing a report on CBDCs,
which touched on many of the topics to be discussed at the Seminar, and which
would be enriched by the conversations of the day.
6  DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS

• He noted that CBDCs could soon constitute a central component of the

digitalisation of our economies and societies and that their possible issuance at
large scale could have a fundamental impact on the structure and functioning of
the financial system. He further remarked that CBDCs therefore had a prominent
place in the policy agenda of OECD and non-OECD member countries: at the time,
central banks in 114 countries around the world were exploring whether to issue
their own retail and/or wholesale CBDCs. Three central banks had fully launched
a CBDC (Bahamas, Jamaica and Nigeria). Pilots of CBDCs with real end-users
were running, or had been run, in five jurisdictions (China, Eastern Caribbean
Economic and Currency Union, Ghana, India, and Uruguay), and sixteen
jurisdictions had started or completed technical proof-of-concept (PoC) work,
including the Euro Area, Japan, Korea, Russia, Sweden, and the United States.
• Mr Di Noia noted that, in advanced economies, central banks were looking at
CBDCs as part of their focus on ensuring continued central bank money access and
monetary sovereignty. These priorities arose against a backdrop of significant
decreases in the use of cash for retail payments, increasing competition from
private sector digital payment platforms, and the emergence of crypto-assets. In
emerging economies, he indicated, CBDC exploration tended to be driven by
financial inclusion motivations, reducing costs associated with physical cash,
increasing payment system efficiency, and strengthening financial integrity.
• Given the central role that possible CBDC arrangements would have on the
structure and functioning of the financial system, Mr Di Noia said it was critical to
consider how such instruments could affect the financial lives of individual
citizens, whether through direct impacts or through systemic effects.
• He suggested that, when introducing CBDCs, and in order to safeguard the
accessibility of central bank money of some form for all citizens, policy makers
could consider the continuous availability of physical cash in parallel to CBDCs.
Depending on how CBDCs were designed, some parts of the population could face
challenges in using them – such as the elderly, people without smartphones or
internet access, people with disabilities or people without formal IDs. CBDCs
should therefore be considered as a means to expand safe payment options, not to
reduce or replace them.
• While CBDCs have been characterised as a potential enabler of a more inclusive
financial system, Mr Di Noia noted that there were also questions about the impact
they would have on financial consumers, especially concerning privacy. At the
extreme, CBDC rails could give issuers the ability to monitor and track all
transactions and other financial activity details of users in case of widespread
adoption of the digital currency. Built-in privacy protections, disassociability and
other design choices are some examples of possible ways to ensure that privacy is
included by default (‘by design’) in a potential CBDC. At the same time, the right
balance would need to be struck between an acceptable level of privacy and other
important public policy objectives of protecting financial integrity of financial
markets (incl. AML/CFT).
• Mr Di Noia noted that the OECD report on CBDCs and Democratic Values, would
be debated at the OECD Committee on Financial Markets in the coming weeks.
 DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS 7

• Finally, Mr Di Noia introduced Maria Demertzis, Senior fellow at Bruegel and

part-time Professor of Economic Policy at the School of Transnational Governance
at the European University Institute in Florence.

Keynote speaker: Maria Demertzis

The key points of Ms Demertzis’s presentation were as follows:
• Ms Demertzis opened her remarks noting that, in the wake of banking turmoil in
the US and Switzerland, increasing calls were being made for CBDCs to be
considered as a deposit guarantee. However, she acknowledged that there remained
a lot of need to understand the value add of CBDCs.
• She noted that CBDCs were a reality (in some form) for 114 countries, representing
95% of global GDP, while a few had fully launched CBDCs. The US and the UK
were still debating the value added; the US had said that they will not launch unless
there is demand from stakeholders. Ms Demertzis highlighted the many choices to
be made regarding the launch of a CBDC - technological, legal, and economic. At
the global scale, governance choices would also be pivotal in terms of defining the
success or not of CBDCs.
• Ms Demertzis explained that she would summarise what CBDCs are and what they
are not. She noted first that CBDCs are legal tender - if you opt to pay with CBDCs
you should not be refused. She further explained that CBDCs are convertible one-
for-one into other forms of central bank money. CBDCs are cash and will not clear
instantly - but they will be as close to a substitute as possible.
• She set out two main purposes for CBDCs - retail CBDC (small payments and
transactions) and wholesale CBDCs (settling transactions in the financial markets,
primarily for banks).
• Ms Demertzis noted that when central banks discuss CBDCs, they define four
strategic goals, with different motives for different central banks: facilitating
payment markets; financial inclusion; monetary policy implementation;
maintaining financial stability.
• She explained that the discussions around CBDCs started with the emergence of
the crypto world, and the worry that crypto currencies were going to take over as a
payment system, and therefore the sovereign monetary authorities were worried
that the monetary base would be undermined.
• Ms Demertzis noted that the world was moving away increasingly from payments
in cash. However, she explained that cash was associated with anchoring trust in
the monetary system when there was a run on a financial institution. If cash were
to disappear, would we also lose the anchor of trust in the financial system? E-cash
could be an answer to this worry. We can dispute whether this is true, but it is a
motive.
• CBDCs aim to preserve the role of public money, she continued. In her view, the
most interesting part of CBDCs was how they were revolutionising the way that
settlements were made and enabling bilateral settlements between any two
countries, which could be used as a finance tool for geopolitical reasons.
• Ms Demertzis then discussed the fear of crypto taking over our systems, showing
that by looking at the market value of the most important crypto currencies, bitcoin
8  DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS

dominated most of the transactions in the ecosystem. Crypto currencies were not,
however, taking over the system. From 2017 to 2021, the increase in the value of
bitcoin transactions is due entirely to the increase in the price of bitcoin. The
volume has not increased.
• Ms Demertzis discussed the second argument in favour of CBDCs: the issue of
financial inclusion. For countries without sophisticated methods of payment, the
provision of a public good, in the form of CBDCs, could contribute to financial
inclusion. In North America and Euro area, she noted, financial inclusion was not
a significant challenge, whereas in Africa and EAP, financial inclusion gaps
remained.
• Countries with financial inclusion challenges were the fastest to implement
CBDCs. Ms Demertzis presented data on the uptake of CBDCs in countries where
they had been launched, demonstrating limited take-up. To explain this limited
take-up, she noted the existence of other alternatives (debit cards, mobile money),
which could be used with existing payment systems and were easily accepted by
merchants.
• Ms Demertzis asked whether the euro should have a CBDC. In terms of motives,
she noted that it would not add value to the euro area on the retail side and it could
cause problems. If a public authority offers a good, she remarked, you have to ask
what the externality is. On the wholesale side, Ms Demertzis noted that cross-
border payments could potentially benefit from the introduction of wholesale
CBDCs, since under the current system, speed is slow, cost is high, there is limited
access and a lack of transparency.
• Ms Demertzis discussed the implications of moving from a dollar-euro-based
international system to a system with bilateral and multilateral financial
settlements. The settlement systems of the dollar and euro are pivotal in
encouraging world trade today, she noted, but CBDCs could remove the centrality
of this. CBDCs could create direct corridors between central banks, bypassing
correspondent banks.
• In conclusion, Ms Demertzis noted that retail CBDCs, where they had been
introduced, had not been a remarkable success - they have little value added in
places where there is robust digital payment infrastructure. Wholesale CBDCs,
however, have potential benefits for speed and cost. Many questions, however,
remain to be solved.

Discussion
Mr Di Noia thanked Ms Demertzis for her presentation and introduced the panellists. He
moderated a discussion in which the following questions were raised:
Q: What do you see as the future of cash with the advent of CBDCs?
Ms Demertzis noted:
• Whatever happens in the future, we need to be prepared. Regarding infrastructure,
it is important to understand that without access to the internet, CBDCs are not of
much use. A second issue to note is that demand for cash will remain; interest rates
matter in this sense. Is digital cash the same as cash? No, but it's very close.
 DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS 9

Priscilla Koo Wilkens, Senior Economist, Innovation and Digital Economy Unit, Economic
and Monetary Department, Bank for International Settlements noted:
• Most of the retail CBDC initiatives have the intention of financial inclusion,
however mostly focused on payments rather than investments. As means of
payment, there are lessons that can be drawn from payment systems (e.g., TIPS in
the euro area). Pix, the instant payments scheme in Brazil, recently celebrated its
second anniversary: within two years, 64 million people made their first credit
transaction ever. The adult population of Brazil is around 170 million. Pix is a
success enabled not only by the infrastructure that allows for settlement. There is
a settlement platform, but this is an effort that the Central Bank of Brazil (BCB)
has been putting forward since 2013 with laws that allowed payment institutions
to be created, that created the groundwork for more competition among
participants. One could see a society that was very digitally ready for that adoption
(more than 75% of household had internet access, more than 90% had access to
smartphones). These components came into play to make financial inclusion
happen. There was also a comprehensive rule book establishing the details of the
payment scheme, including the pricing scheme, and participation criteria for
payment service providers. If a jurisdiction is thinking of retail CBDC as an
infrastructure for payments only, there are other things that need to be addressed
for financial inclusion. Consider switching costs for users, from cash to digital.
Small fees for using digital, for example, might dissuade users from paying
digitally. Even in wholesale CBDC, infrastructure is just one part.
Q: Concerns have been raised about the implications of CBDCs on data protection and
privacy, with the use of CBDCs potentially meaning that all financial transactions could be
tracked by Governments. How can these risks be addressed? Are there other risks arising
from CBDCs that concern you, such as new forms of financial exclusion?
Keith Bear, Fellow at the Centre for Alternative Finance, Judge Business School,
University of Cambridge, noted:
• There are three key topics - access, trust, and utility. Access is a key question
regarding financial inclusion. Smartphone penetration in Nigeria is some 34%,
which is relatively low. How do you make CBDCs available to the digitally and
financially excluded? Regarding the issue of trust, taking Nigeria as an example,
many see a lack of trust in the Central Bank. Bitcoin is much more popular in some
Sub-Saharan countries, including Nigeria. Education, awareness, and campaigns
are necessary to encourage use of CBDC. There are lessons to be learned on this
from Nigeria and the Bahamas. The third issue is around utility. Taking China as
an example, we see a very small percentage of total payment flow going through
CBDCs. One reason is the pre-existing high adoption of payment mechanisms such
as AliPay and WeChat Pay. What is the real incremental utility of a CBDC for
retail users over existing payment systems? For developed countries, there is a risk
that value is not added, and users face the additional complexity of managing a
second wallet. In the UK, there are discussions on what kind of new innovations
and applications can be developed to drive adoption among the financially
excluded but also among the general public: automated payments, supply-chain
payments, social media tips, internet of things. The Bank of England has set a
potential target date of 2030. What will the state of the economy be in 7 years'
time? Probably less cash, among other things. There is tremendous opportunity,
10  DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS

but also tremendous challenge. The outcome will also depend on commercial banks
and intermediaries.
Q: People may see CBDCs as a substitute for bank deposits. We know this is not cash, but
it is a close substitute. Is there a possibility that with the advent of CBDCs, and considering
the role of central banks as issuers of CBDC, central banks could become substitutes for
commercial banks? Would there be an implicit or explicit deposit insurance on CBDCs?
Ms Wilkens noted:
• Jurisdictions vary in their level and their appetite for the boundary between public
and private. Recall the three functions of money - unit of account, store of value,
means of exchange. Most discussion regarding CBDCs has been on means of
exchange. When we're talking about deposits, there's the component of store of
value. No central bank is currently designing retail CBDCs to fully disintermediate
the financial sector and start giving loans to consumers. In this sense, we're
focusing more on the means of payment and not on the store of value aspect of
money. This is one of the arguments for a wholesale CBDC, where you will have
the trust of central bank money (M0) underpinning all transactions, while the
private sector will come and provide all the innovations both for payments and
performing their role in extending credit to society. In this type of arrangement,
you see clear differences in the central bank providing CBDCs as a public good or
as an enhanced form of money. CBDCs can be thought of the plumbing – they will
not actually compete with deposits, lending, etc.
Mr Bear noted:
• Regarding store of value, none of the major CBDC implementations pay interest.
This is a key topic when we're living in a relatively high interest rate environment.
Looking at bank guarantees, for digital euro and digital pound - the holding limits
are much less than the guarantee limits. The distinction between central bank
money and commercial bank money is lost on most users. This is not a significant
factor in adoption.
Ms Demertzis noted:
• Regarding wholesale CBDCs, the innovation there is only the technology, on the
ledger. The ledger would bring about gains on times and costs. However, it would
create a different type of settlement system, with advantages and disadvantages. In
the current financial system, the deposit guarantee is an essential feature of the
retail banking system. Would a CBDC do a better job? The way that central banks
are thinking about this at the moment is not to distort the way the financial sector
is working.
The following questions were raised by members of the audience:
• CBDCs have mainly been considered from the perspective of monetary policy and
financial stability. This seminar gave the opportunity to consider CBDCs from the
perspective of financial consumer protection. Three dimensions arise: inclusion,
the trade-off between keeping privacy but preventing financial crimes, and
implications for financial education. When considering CBDCs as substitute of
paper cash, the most distinctive feature of cash is that it is not tracked. Cash has
been used for tax evasion, money laundering. But cash itself has a physical
constraint - you cannot bring huge amounts of cash. CBDCs overcome that
constraint. Yesterday we discussed the problem of crypto assets, heavily used by
 DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS  11

criminals. How can we overcome that difficulty in CBDCs? Finally, what are the
implications for financial education? Many people, especially kids, learn what
money means when they physically pay with cash. With CBDCs, money becomes
pure digital information. How can young people feel the difference between 10k
and 1k?
• We’ve heard a lot about the challenges of driving take-up. What are the solutions?
If we consider women cross-border traders - they buy their goods in another
country, so if they carry cash there, they risk theft. How do you think about this?
It's difficult to understand the difference between FCP for digital money and
CBDCs. In the case of CBDCs, what are the FCP issues we should look at,
especially with a focus on poor, excluded, women?
• This discussion brings back memories of massive debate in our country about
access to cash. Legislation will be introduced requiring that there is reasonable
access to cash for those who need it. This was driven by research finding that
certain people rely on cash (the digitally excluded, the elderly, for example) and
use it for budgeting. Are there any benefits this can bring, in light of the loss of
cash? Could it resolve some of those concerns and issues that we've seen?
• What can CBDCs provide that digital money cannot? There is talk about expiry
date on CBDC money - is that an issue or something we should be concerned
about?
• When we look at why people are not banked - it's because they do not have enough
money, or they don't have ID. For closed-loop programs (e.g., Government-to-
Person payments), ID is not a problem because the government will identify you.
But if you need the internet, many poor people only have feature phones, not
smartphones. Should we use offline payments?
• In the aftermath of Silicon Valley Bank, we understand that interest rates are a
public good. We are seeing globalisation of inflation. With CBDCs coming into
force and enabling multilateral exchanges, will it bring customer benefits by
reducing barriers to remittances?
• In terms of risks to consumers, are you envisaging specific risks to financial
consumers and investors? Are there specific risks or the same risks as with other
crypto assets?
• Our jurisdiction is undertaking research to see whether CBDCs are feasible. In
Africa, we have other initiatives, such as mobile money, which does not require
the internet. Could CBDCs have negative impact on such private sector initiatives?
Ms Demertzis responded:
• There are indeed risks to consumers. When you have a public solution, what is the
externality you are solving? There isn't a clear answer to this when it comes to
CBDCs. If you were a private provider of payment systems, you'd be worried about
being wiped out. If the consumer misses out on competition, that is a risk. On
financial inclusion, there might be ways of thinking about it that could help - ECB
is looking at off-line solutions.
• Privacy is not anonymity; this is important to remember. While CBDCs will aim
to be private, they will not be anonymous. Even crypto, when regulation comes
into force, will not be anonymous anymore.
12  DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS

• Regarding financial education – and noting that this week is Global Money Week
- the argument about the behavioural issues is absolutely essential. We need to
acknowledge the fact that the world is digitalising.
Mr Bear responded:
• If we have a CBDC in a developed country in seven years, it will be the digital
natives taking advantage of it. Our kids are much more familiar than many of us
are. The question on privacy is very important; this is the most dominant concern
that people have. There's the practical side of it - most of the implementation for
the digital euro and digital pound assume that central banks would not have any
personal information (intermediaries would have responsibility for KYC, etc). That
doesn’t stop the imagined risk to security and privacy - we've already seen some
of the concerns coming out. If you don't trust the government or the central bank,
it will persist as a risk or perceived risk.
• Regarding risks to consumers, there are questions that remain to be resolved.
CBDCs could reduce risk of other payment mechanisms (stablecoins in particular).
Ms Wilkens responded:
• On the privacy and anonymity issue, there are factors that are non-technological.
Technology could go fully anonymous or fully identified. It's more a question for
society to decide. What are the appetites for privacy? An example is how different
jurisdictions might have different views regarding women's comfort making
mobile transactions because they might be concerned about their husbands'
viewing their accounts. Some of the frictions in cross-border transactions are
mainly political. To comply with legal requirements, you must undergo many
checks that technology will not be able to overcome.
• On the drivers of uptake, collaboration is needed between private and public sector.
The vision of user-centric development of products, by thinking about product
development with user-centric focus, will help us get to user needs. We might think
we know what they need but being with users on the ground is what is necessary
to understand the needs and the pains of consumers.
• As we move toward an enhanced type of money, one of the things that comes as a
benefit is the instant settlement (delivery versus payments). How do consumers get
protected in such an environment where a payment is automatically settled without
the opportunity for recourse? FCP is very much needed in a world where
everything becomes automated and instant.
• Regarding expiry dates on CBDCs and their use as vouchers, those are also choices
that societies can make. Technology exists for those use cases, but it's a public
policy decision.

Panel: Jurisdiction updates regarding the development of CBDCs

Mr Miles Larbey, Head of Financial Consumer Protection, Education & Inclusion Unit,
OECD moderated a panel discussion of policymakers from four jurisdictions.
 DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS  13

United Kingdom
Ms Stephanie Haffner, CBDC Senior Specialist at the Bank of England, delivered a
presentation on a potential digital pound. The key points were as follows:
• On 7 February 2023, Bank of England published a consultation paper for a
potential digital pound. The paper analyses the public policy case for a CBDC in
the UK and sets out a proposed design. While the paper explains that a digital
pound is likely to be needed, it does not make any commitment to implement one.
Rather, it maintains that further preparatory work is needed.
• The Bank of England recently completed two years of a research phase and is now
entering a design phase. At the end of the design phase, the Bank will take a
decision on whether to build a digital pound. Next, a build phase will commence
with the aim to develop prototypes and live pilot tests. Then, a decision will be
made on whether to launch.
• Why is a digital pound likely to be needed? The UK House of Lords has said that
CBDCs are solutions looking for a problem. The Bank of England does not believe
this to be the case. We must consider the long term – we cannot only look at how
we pay today. Transactional use of cash is declining, and the usefulness of cash is
limited in the digital world. A digital pound would allow users the option to use
central bank money in transactions online, which is not the case for cash today.
International developments in CBDCs could affect the UK.
• Two key motivations are: to ensure the role of central bank money as an anchor for
confidence in monetary system; and to promote innovation, choice and efficiency
in payments. Other motivations include payments resilience, improving cross-
border payments and advancing financial inclusion.
• The proposal under consideration is for a retail CBDC that would use a "platform
model" comprising a core ledger, API layer, intermediaries, and users. Private
sector innovation would play a key role in the digital pound system.
• Per the high-level design for a digital pound, user interaction would happen
through smartphones or cards, in-store, online and person-to-person payments. It
would need to be easy to move between digital pounds and other types of money.
The digital pound would not pay interest, and there would be a limit on how much
a user could hold.
• Regarding privacy, a digital pound would need to be subject to rigorous standards.
It would be private but not anonymous. Neither Bank of England nor government
would have access to personal data. Users would be able to make choices on how
their data is used. There would be no restrictions by the central bank nor
government on how funds are spent. Some programmability might be offered - but
subject to user consent.
• Financial inclusion is not a main motivation for introducing digital pound, but it
could be an additional payment option. The digital pound would need to be
straightforward and easy to use, trusted and easy to understand.

Brazil
Mr Fabio Araujo, Project Leader of the Digital Brazilian Real Initiative, Banco Central do
Brasil (BCB) presented on Brazil’s Digital Real Initiative. The key points were as follows:
14  DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS

• The Digital Real Initiative follows a consumer-centric design that has been adopted
in developing innovations in Brazil to democratise financial services. Examples
include e-money and Pix for payment services (a synthetic CBDC where deposits
are 100% backed by deposits at central bank, paired with 24/7 instant payments
system). These were very important for financial inclusion in Brazil. 40 million
people made the first digital payments in their lives in the first year of Pix. The
Central Bank of Brazil is now working to increase competition and lower barriers
to entry for fintechs.
• A digital real is the cornerstone of a platform for programmability and efficiency
in contracts which will complement open finance initiatives. The Central Bank of
Brazil aims to promote safe democratisation in access to financial services.
• Most central banks are still looking at what should be the use cases of CBDCs. The
BCB acknowledges that central banks cannot answer it by themselves. They need
to open the discussion to include society. Thus, BCB provided guidelines for
stakeholders to discuss the potential evolution of a CBDC for Brazil. The most
particular feature of the digital real initiative is the willingness to incorporate
technologies that allow for developments that will lower barriers of entry for
fintechs to provide financial services.
• There is a range of existing and potential forms of the Brazilian real: physical,
electronic (typically centralised) and digital (potentially decentralised). BCB is
trying to mirror the relationship between central bank money and commercial bank
money that exists with electronic media in the digital media context (i.e., digital
real and tokenised real).
• Off-line functionality is the quintessential application for retail CBDCs, as only
central bank money has legal tender status, and off-line functionality cannot be
fulfilled by a private entity.
• Several questions remain outstanding: how to handle liquidity, registry and
custody, bridges/stablecoins and integrity.
• BCB has been running tests that will help to assess a wide range of use cases for
proposed by different market participants.

Nigeria
Ms Rashida Monguno, Director of Consumer Protection Department, Central Bank of
Nigeria (CBN) presented on the eNaira, Nigeria’s CBDC. The key points were as follows:
• The global trend toward CBDCs is due, in part, to the decline in the use of cash, an
explosion in digital payments and the rise in private currencies.
• Nigeria’s population comprises 200 million people, the financial inclusion rate is
64% and the most common payment method is cash. There is a large unbanked
rural population. Thirty-eight percent of Nigerians are not literate. Eighty-one
percent of adults own a mobile phone, while less than 40% have mobile internet
access. Twenty-five percent of Nigerians have adopted cryptocurrency.
• The Nigerian financial ecosystem is robust. Nigeria started testing the use case and
potential need for a CBDC in 2017. This research established a compelling need to
launch a CBDC, especially with regards to Nigeria’s youth population.
 DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS  15

• CBN issued a Design Paper with Key Considerations relating to the earning of
interest, regulation, AML/CFT compliance, privacy and data protection. CBN
made sure that regulation was in place for eNaira and made regulation as adaptive
as possible, so it will continue to change, while remaining complaint with
AML/CFT guidelines. The system is account-based and still requires identity
checks (via the biometric verification number). CBN has also considered privacy
and data protection, to bring the CBDC in line with international standards. eNaira
will run at par with Nigerian Naira.
• The core use cases that the eNaira initially addressed were P2P, P2B, diaspora
remittances, and P2G.
• CBN decided to use a tiered approach and a phased launch. The project aims to
reduce levels of exclusion, since one of the objectives is financial inclusion. With
just a phone, an individual can onboard on eNaira, with tiered limits and wallet
caps.
• The eNaira offers a value proposition for all stakeholders - for financial
institutions, fintechs, federal and state government agencies, Nigerians in diaspora,
banked customers, distributor/merchants, unbanked customers, and corporate
institutions.
• Nonetheless, challenges have been confronted, related to security, adoption, and
onboarding.
• Lessons learnt include:
o Collaborate with financial institutions;
o An existing digital ID is critical;
o Identify winners and losers; and
o Adopt a phased approach.
• CBDCs are here to stay, we must conduct our due diligence and learn along the
way.

Australia
Mr Chris Thompson, Deputy Head of the Payments Policy Department, Reserve Bank of
Australia (RBA), presented on RBA’s research into a CBDC. The main points were as
follows:
• RBA started thinking about this issue in 2017, marked by Governor's speech on
whether Australia needed a CBDC. This kicked off a research project that dove
quickly into technology experimentation, with focus on DLT and blockchain. The
project developing proofs of concept using DLT (ethereum), mostly focussed on
wholesale CBDC use cases. We wanted to learn more about the technology, rather
than moving into discussions about design. RBA published thoughts on retail
CBDC in article in 2020; our view at the time was that it's not clear there's a strong
policy case for a retail CBDC in Australia. We were thinking about technology
questions, but one of the fundamental questions that remains unanswered is what
the use case is for a CBDC – in other words, what problem would it solve? Last
year, RBA pivoted its research away from technology and toward use cases for
CBDCs.
16  DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS

• The pilot CBDC is a collaboration between RBA and Digital Finance Cooperative
Research Centre. It aims to explore use cases and business models that could be
supported by a CBDC and the potential economic benefits of introducing a CBDC.
A pilot CBDC, with a real claim on the RBA, will be issued with a limited amount
of money in a ring-fenced environment. RBA invited industry participants to
develop use cases, which could be retail or wholesale. RBA received 140
submissions of proposals and selected around 15 of them in Q1 2023. There are
regulatory questions about the pilots, and the team has been working with
regulatory colleagues to ensure that use cases meet regulatory requirements. Pilots
would go live April/May 2023.
• The pilot CBDC use cases can be grouped into four broad categories:
o settlement of transactions in tokenised/digital asset markets;
o smart payments and digital escrow using the programmable capabilities of
CBDCs;
o banking asset for privately issued stablecoins; and
o peer-to-peer payments using CBDC to provide cash-like digital payment
services for P2P payments.
• RBA has seen significant interest from industry in this project. Industry
participants are spending their own time, money and resources. Majority of use
cases are focussed on wholesale use cases. These use cases do not represent the
full range of use cases for CBDCs, but they give some indication where there may
be demand for CBDCs and the types of problems that a CBDC could solve.

Discussion
Mr Larbey moderated a discussion, during which the following questions were raised from
members of the audience:
Q: One big area for welfare improvement are cross-border transactions. Is there sufficient
coordination happening to prevent countries going in different directions that could make
alignment more difficult?
Q: Can you say more about the costs of running a CBDC?
Ms Monguno responded:
• Charges are very low, to create incentives for adoption. This was agreed between
the central bank and depositary institutions.
Ms Haffner responded:
• The challenge so far on international engagement is the fact that countries are at
different points in their development, which can make coordination difficult.
Mr Thompson responded:
• It is very important that jurisdictions are thinking about having discussions with
each other on what they're developing. We want to make sure that we're not
developing CBDCs in silos. It is important to think about requirements for
interoperability among countries.
Mr Araujo responded:
 DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS  17

• We are conducting experiments in collaboration in the regional area of Latin

America by using ISO technology. For a CBDC, it's much harder to integrate right
now because of the different stages of development. IMF and BIS are important
facilitators of engagement.
Ms Demertzis added:
• There are different motives for using CBDCs, while a common benefit for
everyone is on cross-border payments. The incentives should be aligned for
countries to coordinate. Nigeria should have a leading role in driving this because
they have the experience.
Mr Larbey concluded the Panel discussion by thanking the Panellists for sharing their
experiences and insights and for a rich discussion.

Closing remarks

Mr Chris Green, Chair of FinCoNet, closed the Seminar and thanked all participants.
18  DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS

Speaker Biographies

Carmine Di Noia is the Director for Financial and Enterprise

Affairs at the OECD.
Prior to his appointment, he was Commissioner of the Italian
Securities and Exchange Commission (CONSOB) from 2016
until 2022. In this capacity, he was also an alternate member of
the Board of Supervisors of the European Securities and Markets
Authority (ESMA) and chair of its Committee for Economic and
Markets Analysis (CEMA) and Post-Trading Standing
Committee, and vice chair of the OECD Corporate Governance
Committee.
Carmine Di Noia was previously Deputy Director General and
Head of Capital Markets and Listed Companies at Assonime (the
Association of Italian Corporations) and served two terms as a
member of the Securities and Markets Stakeholders Group at
ESMA. He was also a member of the board of directors of the
Italian Stock Exchange (Borsa Italiana).
He holds a Ph.D. in Economics from the University of
Pennsylvania, a Doctorate in Economic Theory and Institutions
from Tor Vergata University in Rome (Italy), and a Bachelor’s
Degree in Business Economics from La Sapienza University in
Rome.

Maria Demertzis is a Senior fellow at Bruegel and part-time

Professor of Economic Policy at the School of Transnational
Governance at the European University Institute in Florence. She
was the Deputy director of Bruegel until December 2022. She
has previously worked at the European Commission and the
research department of the Dutch Central Bank. She has also held
academic positions at the Harvard Kennedy School of
Government in the USA and the University of Strathclyde in the
UK, from where she holds a PhD in economics. She has
published extensively in international academic journals and
contributed regular policy inputs to both the European
Commission's and the Dutch Central Bank's policy outlets. She
contributes regularly to national and international press.
DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS  19

Keith Bear is a Fellow at the Centre for Alternative Finance,

focused on research and industry collaboration in Blockchain,
Digital Assets and Fintech innovation within Financial Services.
He chairs the Cambridge Digital Asset Research programme,
supported by 15 global institutions, and teaches on the
Cambridge Digital Assets course for Regulators.
Previously, Keith was responsible globally for the strategy,
development and execution of IBM’s business in Financial
Markets, working extensively with global clients on major
transformation programmes.
Keith is a Board Advisor to five Fintechs, a Board Member at
DFNS (a digital asset custody provider), a lead mentor at the
Techstars ABN Amro and Web3 accelerators, a member of the
Technology and Operational Resilience Committee at the LME,
and a member of WEF’s Expert Council. He is also a member of
the ESMA’s Consultative Working Group for Financial
Innovation, and the BoE’s CBDC Technology Forum.
Keith holds a MA (Hons) in Physics from University of Oxford,
an MSc from University of London, and completed a Master of
Business Management programme at the London School of
Economics.

Priscilla Koo Wilkens is a Senior Economist in the Innovation

and Digital Economy unit within the Economic and Monetary
Department of the Bank for International Settlements. Prior to
joining the BIS, Priscilla was the head of the Pix Management
Division within the Competition and Financial Market Structure
Department of the Central Bank of Brazil (BCB) and had a long
experience working in the Financial System Monitoring
Department, where she co-led as business manager the
development of the Brazilian Credit Information System run by
the BCB. Graduated in Industrial Engineering from Escola
Politécnica da Universidade de São Paulo, she completed a
master's degree in Public Administration with an emphasis on
Economics and Finance at Cornell University.
20  DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS

Miles Larbey is the Head of the Financial Consumer Protection

Unit at the OECD. He is responsible for the OECD’s work on
financial consumer protection policy, as well as supporting the
G20/OECD Task Force on Financial Consumer Protection and
FinCoNet, a network of market conduct supervisors. Particular
areas of focus include the protection of consumers who may be
vulnerable, the impact of digitalisation, demographic changes,
financial inclusion, sustainability, and the impact and response to
COVID-19.
Miles has over 25 years’ experience of working in financial
regulation, law and policy; banking and insurance supervision;
and financial education across a number of jurisdictions. Before
his role at the OECD, Miles held positions as the Senior
Executive Leader for Financial Capability at the Australian
Securities and Investments Commission; General Manager of the
Investor Education Centre in Hong Kong; and worked on
consumer protection law reform at the Financial Conduct
Authority in the UK.

Stephanie Haffner is a senior specialist in the Bank of England’s

CBDC Unit, covering domestic stakeholder engagement and
work on functional design.
Stephanie has been working at the Bank of England for seven
years, and has held roles across Financial Market Infrastructure
and Prudential Policy. Prior to joining the Bank, Stephanie
worked at the European Commission and at a political risk
consultancy.
Stephanie holds degrees in European political economy and
economics from the London School of Economics and Claremont
McKenna College.
DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS  21

Fabio Araujo is a telecommunications engineer and PhD in

economics and has been working at Banco Central do Brasil
(BCB) since 1998. At the beginning of in his career in the BCB
he took part in the implementation of the Inflation Targeting
regime in Brazil and, afterwards, dedicated to advising the
conduct of the monetary policy. More recently, Fabio was the
head of the Office of Economic Advisors to the Governor and
currently coordinates the work for the future implementation of
the Digital Real - the digital version of the Brazilian Real.

Rashida Monguno is the Director of Consumer Protection

Department at the Central Bank of Nigeria. A visionary and
Solution-Oriented Senior Director with 29+ years of success
managing executive board administrative affairs, leading
chartered secretarial project teams, coordinating strategic
commercial developmental and consumer protection processes
for the Central Bank of Nigeria. A proactive Legal Advocate
leveraging profound background in Corporate and Commercial
Law, Consumer Protection, Regulatory Compliance, Corporate
Governance, Legal Drafting, and Risk Management gained
through working with different committees across variety of
sectors.
She holds a Bachelor of Law (LL. B) from the University of
Maiduguri, Borno State, and a Master of Laws (LL.M),
University of Abuja both in Nigeria.
She is a member of the Nigerian Bar Association, an Associate
of the Chartered Governance Institute (ICSA), London, a Fellow
of the Institute of Chartered Secretaries and Administrators of
Nigeria (ICSAN), an Associate, Institute of Chartered Mediators
and Conciliators of Nigeria (ICMC) and an Associate of the
Society for Corporate Governance of Nigeria (SCGN).
She is also a Member of several Institutes which included
institute of Directors of Nigeria, Institute of Credit
Administrators, Chartered Institute of Bankers of Nigeria (CIBN)
Risk Management Administrators of Nigeria (RIMan).
An outstanding Multilingual Communicator (English, Hausa,
Yoruba, and Kanuri) with the ability to build and lead highly
efficient teams and convey complex concepts in understandable
terms.
22  DEVELOPMENTS IN CENTRAL BANK DIGITAL CURRENCIES AND ISSUES FOR CONSUMERS

She possesses proven expertise in Project Management, Strategic

Planning, Organizational Modelling and Design, Stakeholders
Management, Board Reporting, Business Advisory and
Partnering, Budget Planning and Optimization, Performance
Management, Labour Relations, Information Management, and
Expatriate Relations. She has over time demonstrated a record of
delivering sustainable results consistently and have made
significant independent contributions to planning and developing
policies and procedures.
She is described as a valued mentor and leader, who provides
employees with the autonomy to do their work well while
building strong, personal relationships to improve
communication and advance business development efforts

Chris Thompson is a Deputy Head of the Payments Policy

Department at the Reserve Bank of Australia, where he
contributes to the RBA’s policy work in relation to promoting a
safe, competitive and efficient payments system. For the past few
years, he has been leading the RBA’s research work on central
bank digital currency. He has previously had a number of other
roles in the RBA, including as Chief Representative in the New
York Representative Office, and prior to that in the Financial
Stability, Domestic Markets and Economic Analysis
Departments. He did his graduate study at the London School of
Economics.