#7: CBDC Motivations and Challenges – A Perspective from Asia-Pacific

CBDC Broadcast

7 Jul

20th July 2022

With:

| Masaki Bessho (Bank of Japan)

| Dr. Steven Hu (Standard Chartered Bank, Singapore)

In Session #7, Masaki Bessho (Bank of Japan) and Dr. Steven Hu (Standard Chartered) join FNA to discuss the unique CBDC trajectories of two major financial hubs. While the Bank of Japan (BOJ) focuses on the resilience and "plain vanilla" design of a digital yen that complements physical cash, Singapore’s Monetary Authority (MAS) has shifted toward "Project Orchid," exploring the specific infrastructure needed for a programmable digital Singapore Dollar.

Our guests delve into the "Two-Tier" architecture, where central banks provide the core ledger and commercial banks—acting as custodians—manage the user-facing innovation. We explore the strategic "First-Mover" debate: is it better to lead the race or to be a "fast follower" who learns from the friction of early pilots? The session also addresses the compliance hurdle, analyzing how to balance transaction privacy with the rigorous AML/KYC standards required by global custodians like Standard Chartered.

Key Discussion Points:

Tailored Motivations: Contrasting Japan’s focus on payment resilience and "cash-like" functionality with Singapore’s emphasis on programmability and efficiency.
The Custodian’s Role: How institutions like Standard Chartered prepare for the shift from traditional securities to tokenized assets and CBDC settlement.
Ledger Design Alternatives: An inside look at the BOJ’s experiments with centralized vs. decentralized ledgers and the trade-offs of each.
The First-Mover Advantage: Assessing whether early issuance provides a geopolitical edge or simply exposes a nation to "pioneer risks."
Managed Anonymity: Practical frameworks for providing user privacy while ensuring regulators can still "trace the signal" of illicit financial activity.
Cash Coexistence: Why the Asia-Pacific region views CBDC as a critical complement to physical cash rather than a total replacement.

Watch on Demand:

Listen on: Spotify | Apple Podcasts | Amazon Music

Resources & Links:

The Future of FinTech: Chapter 7: Central Bank Digital Currencies: Opportunities and Challenges in the Post-pandemic Era pp 223-280 (2022) Read More >
Bank of Japan, Liaison and Coordination Committee on Central Bank Digital Currency Interim Report (5th July 2022) Read More >
Bank of Japan presentation on CBDCs Read More >
Bank of Japan’s approach to CBDCs Read More >