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Sovereign digital currencies: Reshaping the design of money and payments systems
This paper focuses on how technology might reshape payments going forward. It considers the policy issues and choices associated with crypto-currencies, stablecoins and sovereign digital currencies and emphasises that there is no single model for sovereign digital currency design. While Bitcoin and its progenies could be safely ignored by regulators, Facebook’s proposal for Libra, a global stablecoin, brought an immediate and potent response from regulators globally. Any proposal by the private sector to move into the creation of currency — the traditional preserve of sovereigns — was always likely to trigger such a regulatory response, as well as the launch of sovereign digital currencies by other major central banks. While China has moved first, dozens of other countries are now investigating their own central bank digital currencies or other forms of sovereign digital currency. This paper argues that central banks should first focus not on rolling out novel new forms of sovereign digital currencies, but rather on transforming their payment systems. In time, domestic money and payment systems are expected to evolve so that central banks cooperate with (new and old) private entities to launch digital currencies that better underpin monetary and payment systems at the domestic, regional and international levels.
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Ross P. Buckley is the KPMG Law — King & Wood Mallesons Professor of Disruptive Innovation at UNSW Sydney. He is an Australian Research Council Laureate Fellow and leads a five-year project into the regulation of the data revolution. He chairs the Digital Finance Advisory Panel of the Australian Securities and Investments Commission. He has consulted to government departments around the world, and been a Fulbright Scholar at both Yale and Duke.
Douglas W. Arner is the Kerry Holdings Professor in Law and Director and co-founder of the Asian Institute of International Financial Law at the University of Hong Kong. He is a Hong Kong Research Grants Council Senior Fellow and a Senior Visiting Fellow at Melbourne Law School, University of Melbourne, a nonexecutive director of the Aptorum Group, and an Advisory Board Member of the Centre for Finance, Technology and Entrepreneurship.
Dirk A. Zetzsche holds the ADA Chair in Financial Law (inclusive finance) and coordinates the Centre for Sustainable Governance & Markets at the University of Luxembourg. His research interests include FinTech, RegTech, investment funds, corporate and banking law. He functions on ESMA’s FinTech advisory group and co-chairs the European Banking Institute’s FinTech working group.
Anton N. Didenko is a research fellow at University of New South Wales Sydney specialising in banking and finance law, with a focus on FinTech, RegTech and cyber security. He is a Russian qualified lawyer with ten years of experience as in-house counsel for major commercial banks in Moscow and as senior associate at a law firm in London. His experience covers advising on banking regulations and legislation applicable to financial intermediaries, as well as a wide range of financing transactions.
Lucien J. Van Romburg is a research fellow at the Asian Institute of International Financial Law and a PhD candidate at the University of Hong Kong. He has six years’ experience practising financial services regulation and dispute resolution law in South Africa and the UK. His research interests lie at the intersection of law, finance and technology, focusing on regulatory competition and the regulation of financial technology.