banking TAIMUR BAIG , DBS TAOJUN XIE, Singapore Management University - - PowerPoint PPT Presentation

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banking TAIMUR BAIG , DBS TAOJUN XIE, Singapore Management University - - PowerPoint PPT Presentation

Mar 07, 2024 459 likes •591 views

Digital currencies, banking, and central banking TAIMUR BAIG , DBS TAOJUN XIE, Singapore Management University Digital currencies, past, present, and future Western Union began using its telegraph network for wiring money in 1872 More

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Digital currencies, banking, and central banking

TAIMUR BAIG, DBS TAOJUN XIE, Singapore Management University

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Digital currencies, past, present, and future

  • Western Union began using its telegraph network for wiring money in 1872
  • More than a century ago, traders in London and New York communicated with each-
  • ther in real time
  • Central banks have been managing the issuance of reserves to banks electronically

for many decades

  • RTGS, FedWire, CHIPS, SWIFT, EFTS have been operating for decades
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Digital currencies, past, present, and future

  • What has changed?

➢ Mobile computing power ➢ Connection speed ➢ Innovations like blockchain and cryptography ➢ Secure digital payments and settlements are now at our fingertips

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Digital currencies, past, present, and future

  • This is a daunting subject

➢ “It is with peculiar diffidence and even apprehension that one ventures to

  • pen one’s mouth on the subject of money” -- John Hicks

➢ Digital currency => payments system, banking, monetary policy, and financial stability ➢ Each of these topics have vast history, extensive literature, best practice, and legal and jurisdictional implications ➢ Digital cryptocurrencies => computer science and cryptography

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Is cash dying? Evidence from around the world

Source: BIS, DBS. Data from 2016

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Is cash dying?

Source: BIS, DBS

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Is cash dying?

Source: BIS, DBS

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India’s demonetization experiment

Source: RBI, DBS Note: Note: all data points as of March 31 of the fiscal year, except, for FY19, for which the data is for May 25, 2018

4 6 8 10 12 14 16 18 20 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

India, notes in circulation

INR trillion

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Cash versus non-cash in Singapore

Source: MAS, DBS

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Cash versus non-cash in Singapore

Source: DBS

  • 10%
  • 5%

0% 5% 10% 15% 20% 1Q2017 2Q2017 3Q2017 4Q2017 1Q2018 DBS bank: cash and non-cash transactions cash/per account non-cash/per account yoy

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Cryptos: Currencies or Assets?

  • Centralized and decentralized payment systems
  • Speed versus security
  • Blockchain is promising; jury out on cryptos
  • Risk of over-supply
  • Project Ubin
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CBDCs

  • Technology already there:

➢ Provide each citizen with a central bank account ➢ Credit them with CBDCs ➢ Potential to charge negative interest rates ➢ Efficient and targeted transfer of money to citizens ➢ What happens to banks?