On 26th January 2021, an event held by Copenhagen fintech ‘Fintech Tuesday’ discussed the use of digital currencies in the financial world, through central banks. This article will briefly summarize the event, as well as discuss some interesting points made throughout the webinar. Included in the discussion were some of ‘the most highly regarded researchers and organizations within the area’.
The event started with a welcome and introduction by Copenhagen Fintech, before the first speaker, Ole Bjerg. Ole Bjerg is an Associate professor at the Copenhagen business school, and was tasked with a research perspective. The scope of his discussion was ‘What is money?’ A key point in this was a slide named “Three points of concern”- containing the questions: ‘What counts as the highest form of money?’, ‘Who governs the creation of monetary value?’, ‘Who controls the payment system?’ Complementing the questions was a Venn diagram containing different forms of money and whether they satisfy the three categories. The key takeaway from this is that the central bank satisfies all three, unlike other stores of monetary value.
Source: Ole Bjerg
Following Ole was Bjorn Segendorf, Advisor at The Swedish central Bank/ Sveriges Riksbank. ‘Bjorn has been an advisor for the Swedish Central Bank for a decade, and has been a big force in their e-krona project.’ A key objective of the Swedish Central bank is to create a cashless society, with the e-krona project described as ‘ground-breaking in the world of central bank digital currencies.’ As such an influential figure in the digital currency scene, it was great to hear Bjorn’s input on digital currencies in an industry perspective.
Another industry perspective was led by Morten Spange, Chief Monetary Advisor for the Danish Central Bank/ Nationalbanken. In December 2017, the Nationalbanken ‘came to a different conclusion than the Swedish Central Bank.’ Because of this Morten discussed his views on the matter in contrast to Ole Bjorn’s.
Fundamentally it is believed that a central bank digital currency would not be an improvement on the existing system. Furthermore it would establish the central bank as a direct competitor to commercial banks, and ‘also lead to risks of financial instability’. The Swedish Central Bank instead of ruling out a digital currency, has introduced a project running through February 2021 with the e-krona, to experiment and ‘increase its knowledge of what would be required to realise the idea of a central bank-issued digital krona.’
Finally, Bo Hembæk Svensson, Strategic Advisor for Nordic Blockchain Association, gave a Start-up perspective. The Nordic Blockchain Association has the intention of ‘Examining the impact, issues, significance and benefits of Blockchain’. An important part of Bo’s discussion was examining a huge change that occurred in 2020, with multiple central banks now supporting the use of digital currencies. To be precise, the list consisted of ten countries: Canada, Ecuador, France, Japan, Singapore, South Africa, Sweden, Switzerland and Venezuela.
This is significant as multiple nations are trialling out digital currencies. This innovation will provide new opportunities for businesses in the future. Bo stated that ‘It usually takes 20 years from introduction to world-dominance. Blockchain is 11 years old.’ Going by this theory, start-ups and other established businesses should be planning to look at digital currencies, in preparation for a decades time.
It was very intriguing to listen to the different perspectives of industry specialists on the use of digital currency for central banks, as well as the effect on established and start-up businesses. We would like to thank Copenhagen Fintech and all the mentioned speakers for providing this informative event.
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