a central bank. in the extreme scenario, cbdcs could encourage “ digital ” sector - wide bank runs which could occur in an unprecedented speed and scale. the role of the central bank would probably have to change as well, to the point where it may have to extend credit to the economy. here i have to admit that central bankers tend to be competent officials. however, market forces are generally more efficient in allocating resources. as the cbdc crowds out cash and commercial bank deposits, a larger central bank balance sheet may be needed to maintain bank reserves through liquidity - injecting open market operations. this might increase credit risk for the central banks, especially if it becomes necessary to widen collateral eligibility. larger - scale accumulation of assets could also distort financial markets. there also other more general drawbacks applicable to most types of the cbdc. first, the robustness of the proposed underlying technologies for issuing the cbdc is quite uncertain. for instance, the dlt is relatively immature and we are still learning the way it operates. also, the crucial issue is the adherence to the money laundering requirements. given the ease with which large amounts can be transferred electronically, how are we to apply the aml standards to the anonymous forms of cbdc? the aml compliance would place a huge prevention burden on central banks, on any level of anonymity of the currency. - - having taken the bird ’ s - eye view, let us now zoom in at some of the positions of central banks. the riksbank in sweden seems to be the closest to actually issuing a cbdc, the so - called ekrona. the bank has been working on it since early 2017, and a possible pilot program is the pipeline. the underpinning argument is that the state needs to maintain the role in the payment system, considering the trend of dramatically declining cash use in the country. interestingly, the central bank of another nordic country – denmark – is on the opposite side of the pole. it has announced that it has no plans to issue cbdc since it would not improve the existing payment solutions and may also increase financial stability risks. such divergence of opinions in otherwise a relatively homogenous region only illustrates the controversial nature of 3 / 4 bis central bankers'speeches the issue at hand. beyond the discussion on sweden and denmark, only a few national central banks ( with the central bank of uruguay being a notable example ) globally have taken real practical steps towards developing cdbc

vitas vasiliauskas : central bank digital currencies speech by mr vitas vasiliauskas, chairman of the board of the bank of lithuania, at the reinventing bretton woods committee conference " managing the soft landing of the global economy ", washington dc, 12 april, 2019. * * * good morning, dear ladies and gentlemen, first of all, let me thank the organizers for the opportunity to participate in this conference. i must say that i was pretty surprised when i received the invitation to cover the topic of central bank digital currencies – or cbdcs. this probably happened because the bank of lithuania has been seen lately as one of the frontrunners in the broader fintech domain. yet despite being an innovation - friendly regulator, in terms of cbdcs, we do not have much inhouse projects to share, at least at this point. this is apart from the digital collector coin of course, which is quite another thing. however, i will do my best to cover the topic : in my view, issuing cbdcs represents one of the most intriguing and complex ideas in current discussions on the monetary system. - - let me begin with a basic question : what exactly are cbdcs? well, it is in fact easier to first say what they are not. under the current financial architecture central banks issue two sorts of money : currency in circulation in the form of the good old banknotes and coins, and digital money, available as reserve or settlement accounts with the central bank. accordingly, households and businesses cannot hold claims on the central bank in a digital form. the banks and certain other financial or public institutions can. and yet, when we talk about the concept of cbdc, we have in mind something new, something unlike what we currently have. the cbdc would be a novel type of central bank money. although also digital, it should be distinguished a traditional reserve account. the cbdc would also be fundamentally different from private crypto assets. this is because it would be … money! it would serve as a medium of exchange, a means of payment and a store of value, just like the current forms of central bank money. it is thus simple to define what the cbdc is not : not a conventional reserve account, and not a private crypto asset. but once you start explaining what it is, the picture gets complicated. the complexity lies in the variety of combinations of different properties that the cbdc can