Excerpts from speech by Agustín Carstens, general manager, Bank for International Settlements, Lee Kuan Yew School of Public Policy, Singapore, 15 November 2018
We take a public policy view of physical infrastructure: building new roads or bridges is not a decision which is taken overnight, nor are private interests given free rein to determine which route to take or how many lanes are needed. We must take the same amount of care with our digital infrastructure as we do with our physical infrastructure, keeping in mind the goals of developing, improving and (ultimately) transforming our economy and society.
This is particularly important for the financial system, the most digitally connected part of the economy. The first step is to scout out the destinations we want to reach. Then we can consider the best routes, map out a course, and harness the best and most appropriate technology to help us get there. Let’s decide on the destination before building the road.
Some of the observations made are that: cryptocurrencies have serious economic design flaws; the underlying payment process congests and the finality of payments is problematic; cryptocurrencies are unstable, including so-called “stable coins”; hardly anyone uses cryptocurrencies for retail purchases; cryptocurrencies are highly conducive to illegal activities and the latest advances are yet to solve these problems; cryptocurrencies compare unfavourably with other payment technologies; the case for DLT in public and private uses remains unproven.