Sovereign Digital Currencies: Reshaping the Design of Money and Payments Systems

15(1) Journal of Payments Strategy and Systems 7 (2021)

UNSW Law Research

16 Pages Posted: 3 May 2021

See all articles by Ross P. Buckley

Ross P. Buckley

University of New South Wales (UNSW) - Faculty of Law

Douglas W. Arner

The University of Hong Kong - Faculty of Law

Dirk A. Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance; Heinrich Heine University Dusseldorf - Center for Business & Corporate Law (CBC); European Banking Institute

Anton N. Didenko

University of New South Wales (UNSW) - Faculty of Law

Lucien van Romburg

The University of Hong Kong - Asian Institute of International Financial Law

Date Written: April 1, 2021

Abstract

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.

Keywords: sovereign digital currencies, central bank digital currencies, Libra, digital yuan, COVID-19, payments, stablecoins, blockchain

Suggested Citation

Buckley, Ross P. and Arner, Douglas W. and Zetzsche, Dirk Andreas and Didenko, Anton and van Romburg, Lucien, Sovereign Digital Currencies: Reshaping the Design of Money and Payments Systems (April 1, 2021). 15(1) Journal of Payments Strategy and Systems 7 (2021), UNSW Law Research, Available at SSRN: https://ssrn.com/abstract=3834879

Ross P. Buckley

University of New South Wales (UNSW) - Faculty of Law ( email )

Sydney, New South Wales 2052
Australia

Douglas W. Arner (Contact Author)

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://hub.hku.hk/rp/rp01237

Dirk Andreas Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance ( email )

Luxembourg, L-1511
Luxembourg

HOME PAGE: http://wwwen.uni.lu/recherche/fdef/research_unit_in_law/equipe/dirk_andreas_zetzsche

Heinrich Heine University Dusseldorf - Center for Business & Corporate Law (CBC) ( email )

Universitaetsstr. 1
D-40225 Düsseldorf
Germany
+49 211 81 15084 (Phone)
+49 211 81 11427 (Fax)

European Banking Institute ( email )

Frankfurt
Germany

Anton Didenko

University of New South Wales (UNSW) - Faculty of Law ( email )

Kensington, New South Wales 2052
Australia

Lucien Van Romburg

The University of Hong Kong - Asian Institute of International Financial Law

Faculty of Law, Pokfulam Road
Pokfulam
Hong Kong
Hong Kong

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