‘Choices around the technology used for CBDC are important as they would have a significant impact on the extent to which CBDC meets our overall objectives’, The Bank of England
Technology plays a crucial role when it comes to launching CBDCs projects. Often associated with Distributed Ledger Technology (DLT), there are many other technological possibilities that could support these projects and ‘the technology used to power CBDC should be chosen on the basis of users’ – central banks - design principles’. Still, DLT does have some benefits, such as distribution and decentralisation to enhance resilience and availability but could have a negative impact on aspects like performance, privacy, and security. It could also include some potentially useful innovations, as CBDC may be able to provide ‘programmable money’ through smart contracts.
Overall, in their discussion paper around the topic of CBDC, Bank of England admits ‘there is no inherent reason it could not be built using more conventional centralised technology’, and that ‘there are trade-offs between different design principles, so we would have to strike the right balance in order to achieve the Bank’s policy objectives’.
Therefore, with a strong focus on the best technology to be used for CBDC, we continue our CBDC series by interviewing Lars Arvidsson, Chief Commercial Officer at eCurrency.
Can you tell our readers a bit about your professional background and the history of eCurrency?
eCurrency is a research, development and operational company founded in 2011 with the mission to enable central banks to issue and distribute digital fiat currency.
eCurrency was founded by a team of seasoned technology and business professionals with a track record of success. The team of highly skilled scientists, policy experts, and expert technologists has met the exact standards and requirements, set through ongoing and direct consultation with central banks around the world, for the issuance and distribution of CBDC.
eCurrency designed, built, and piloted the Digital Symmetric Core Currency Cryptography (DSC3) technology to enable central banks to issue, control, and supervise digital fiat currency that is then distributed through commercial banks and payment service providers. We are active globally in providing thought leadership on the motivation, design, and policy issues driving CBDCs through extensive engagement with central banks and participation in international forums and standards bodies.
I have more than 30 years of experience in the ICT industry with extensive international experience developing and building sustainable markets in the financial infrastructure area. Currently, I am the Chief Commercial Officer at eCurrency and I am in charge of all commercial and businesses worldwide for eCurrency.
During many years of experience I held several senior executive roles as VP and Head of Global Sales & Partnering for Ericsson Financial Services, VP & Head of Strategic Outsourcing IBM Nordic, Head of Global Sales and Alliances Sun Microsystems, and General Manager ICL Retail Scandinavia. Also, I have participated as member of committee and taskforce in several strategic global initiatives with World Bank, ITU and Bill & Melinda Gate Foundation to drive and support initiatives in the area of interoperability and sustainability in the financial ecosystem.
When it comes to customers, you serve central and commercial banks. How do you cater for each segment?
The company was formed to create a highly secured technology specifically for CBDC. The eCurrency solution was designed for the sole purpose of enabling central banks to issue and manage digital fiat currency based on their strategy and policy. The process and technology have been designed and applied such that central banks can release the vast benefits of digital payments.
Commercial banks have also deployed the solution to provide security to their customers with the built-in safeguards. The deployment of the technology in commercial environments has provided the opportunity for the country’s central bank to monitor and study the solution. The commercial deployments have acted as a proving ground for the technology. It’s also worth to mentioning, that to drive and be engaged on various location world wide we need of course to engage and partner with talent and state of the art local partners in order to address our customers and target customers’ needs and expectations.
Thomas Kudrycki, eCurrency’s CTO, said in an interview that eCurrency tech was developed in a traditional way, firstly gathering requirements from central banks about how should CBDC look like. Please tell us more about the responses your company got. What did eCurrency.net find striking while gathering input from the market?
eCurrency has worked with over thirty central banks over the past several years to gather requirements. The founding team came together to create a solution that enables central banks to issue a secure and efficient digital currency that is legal tender of that land. What was unwavering was that central banks all wanted to preserve the security, transparency, and efficiency of physical currency while safeguarding its citizens’ privacy.
What technology could CBDC use?
A purpose-built technology serves best when aiming to comply with the requirements that are being set forth by central banks and regulatory authorities. eCurrency has based its solution on DSC3 technology, specifically pioneered for the purpose of enabling central banks to issue and manage a secure digital currency with the characteristics of physical currency based on the requirements and policy defined by these institutions and authorities. The solution is also enabled with an open API to secure sustainable interoperability with actors in the financial ecosystem and we at eCurrency are a strong believers that these components and attributes in our DSC3 technology is essential for the long term success of our customers and stakeholders in the CBDC market place.
What are the benefits of CBDC for end users?
The eCurrency solution ensures that the end user’s experience does not change from their current interaction in their use of payment cards, mobile money wallets, etc. The benefit is that the Central Bank issued digital object infuses trust in them by turning the digital values into sovereign-backed currency. CBDC is interoperable between all the systems that central banks, commercial banks and credit unions, merchants, e-wallet, and mobile money providers, as well as consumers have become accustomed to using.
What is the impact of successful CBDCs on different parties in the market?
CBDCs provide a broad set of benefits for consumers, businesses, governments, and all stakeholders across the financial ecosystem. The eCurrency solution, enabling secure and efficient central bank issued digital currency, supports opportunities presented by the transition to digital payments including increased business activity, productivity, financial inclusion, and economic growth. Merchants and businesses benefit from cost savings and trust infused in the digital instrument which they are able to transfer to the consumer. Central banks realise their responsibilities as the sole issuers of national currencies, reducing the need to regulate private sector forms of digital value. With eCurrency technology, we provide powerful new policy tools to help governments achieve better outcomes in terms of long-term policy- and financial infrastructure capabilities.
In case you missed the last instalment of our Central Bank Digital Currency series, about CBDCs plans/projects coming from the US, check out Douwe’s Lycklama, from Innopay, article here.
Still new to the topic of Central Bank Digital Currencies? We recommend reading Central Bank Digital Currencies for dummies – a quick guide into CBDCs from the Dutch Central Bank, an educational piece written by Harro Boven, Policy Advisor at the Dutch Central Bank.
Happy Friday and watch out for our next instalment of Central Bank Digital Currency series. Meanwhile, feel free to share your thoughts and ideas on the CBDC topic with The Paypers at editor@thepaypers.com.
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