The Era of Central Bank Digital Currencies Is Within Reach

Since 2014, discussions of a publicly accessible digital payment vehicle issued by a central bank have matured significantly.

Central bank digital currencies have been the center of many high-level discussions, notably at the Bank for International Settlements and the International Monetary Fund.

Further, just as payment habits with physical cash, credit card, or cell phone use varies from country to country, different regional consumer preferences regarding anonymity, fees or interest payments would persist with a digital manifestation of "Physical cash."

Successful and wide-scale CBDC implementation would require architects to consider consumer demand, payment habits, and preferences within a particular country - possibly resulting in idiosyncratic design decisions.

Project Jasper's Phase 3 white paper, a collaborative effort between Payments Canada, the Bank of Canada, TMX Group, Accenture and R3, required coordination amongst many different stakeholders -the breadth of analysis and innovative thinking shows in the end result.

The recent report on creative approaches to cross-border settlement systems by the Monetary Authority of Singapore, the Bank of England, and the Bank of Canada is a must-read for payment nerds.

While progress with wholesale payments is great, retail, or consumer, payments are also ripe for innovation.

Despite the persistence of and even increases in the amount of physical cash in some regions, consumers globally are trending towards digital payment use.

Building digital solutions on top of existing financial market infrastructure may only enable private sector-led retail-level payment innovations to get so far.

Future innovation with platforms backed by central bank-issued money, if done with a responsible and careful architecture, has the potential to better serve payment niches that are either currently poorly addressed by the private sector, or fill the future gap left by paper's inevitable decline in the wake of more digital payment volume.