Excerpts from speech by Agustín Carstens, general manager, Bank for International Settlements, Finance and Global Economics Forum of the Americas, University of Miami Business School, 1 November 2018
Money and payments continue to evolve, and I think the future is promising. I see more robust and resilient systems from central banks offering immediate settlement. I see foundations being laid for new, innovative front-end user interfaces that provide convenience, promote financial inclusion and permit increased economic activity. I see infrastructure being developed that will allow for more efficient and cheaper crossborder payments and remittances. I see central banks continuing to play a critical role in pushing the boundaries of how technology can enhance the payment landscape.
In doing so, central banks will need to monitor and manage new and different risks arising from the latest technologies. The use of DLT and other technologies, such as artificial intelligence and quantum computing, comes with new challenges. We still need to address questions related to the use of newer technologies, including reliability and security; interoperability between new and existing systems; the legal underpinnings of the processes associated with the technology; and data integrity and privacy. These issues are not easy, and addressing them will probably take some time given their complexity.
Central banks are working to improve their systems’ operational resilience. The international standards for systemically important payment systems require that they be able to resume operations within two hours of an operational outage. As you can imagine, resuming operations within two hours of something like a cyberattack is not always easy to do. The problem needs to first be diagnosed, and then it needs to be determined whether the system can safely turned back on again. Central banks have adopted, and others are exploring, different arrangements, including DLT-based arrangements and last resort contingency arrangements, to ensure the highest levels of operational resilience.
What I struggle to see, however, is cryptocurrencies taking off in any major way. Cryptocurrencies, as a unit of account and payment instrument, simply cannot compete with the value proposition offered by central banks and their systems. It is hard to compete with human intelligence and experience in managing processes and systems. It is hard to beat instantaneous settlement, which many central bank payment systems provide. It is hard to replicate the enormous network that exists with today’s payment infrastructure.