burkhard balz : is cbdc the money of the future? keynote speech by mr burkhard balz, member of the executive board of the deutsche bundesbank, at the central bank payments conference, kuala lumpur, 10 june 2024. * * * check against delivery 1 introduction ladies and gentlemen, thank you very much for your warm welcome. it is both an honour and a pleasure for me to be here today in the wonderful city of kuala lumpur and to have the opportunity to speak here to such a distinguished audience. a city that has always been a melting pot of cultures and ideas, kuala lumpur is no stranger to innovation and transformation. from the days of trade along the klang river to becoming the financial heartbeat of malaysia, this city has continually adapted to the evolving tides of commerce and technology. as we stand here today amidst the towering skyscrapers and vibrant streets, we are at the cusp of embracing a financial evolution that promises to redefine our experience with money and commerce. this is the context within which i wish to focus the topic of my keynote this morning – central bank digital currencies, or cbdcs for short. a subject that is as timely as it is significant. 2 the future is digital we are living in an exciting time where digitalisation is impacting almost every aspect of our daily lives. it has not only changed the way we communicate, learn, work, and engage with the world around us, it has also reshaped the way that we pay. electronic means of payment have become a widespread alternative to established physical cash and have developed even further in recent times. new digital payment solutions such as instant payments, request - to - pay and pay - per - use are also gaining traction. these are all developments that also pose new challenges for central banks. as central bankers, we need to ask ourselves what our own role in payments should be in an increasingly digital world. after all, citizens'trust in payments depends on this. in an increasingly digital world, banknotes and coins are still the only means of access to central bank money for the general public. it stands to reason that central banks need to provide an additional digital offering to ensure that access to central bank money is maintained for everyone, even in a digital future. note that i deliberately say " additional " here, because in my view, banknotes and coins still have their place as a tried - andtested and still frequently used means of payment. cbdcs

world of possibilities for the development of new financial products and services. smart contracts for automated payments, decentralised finance, and micropayments are just some of the innovative applications that could become a reality in a future cbdc ecosystem. 5 what would a digital euro be? the digital euro would not merely be a digital upgrade of banknotes and coins, but also a symbol of europe's commitment to innovation, financial inclusion, and the seamless integration of europe's economies. ultimately, it would pave the way for our currency to enter the digital age by making it " future - proof " and fit for purpose in an increasingly digital society. the digital euro would be an additional means of payment alongside cash and would give citizens in europe the option to pay electronically with central bank money. and that would be the case throughout the entire euro area in a total of 20 european countries, and potentially beyond, in almost all everyday payment situations – be it at the checkout in retail stores, among friends and relatives, when making purchases online, or even when making payments to or receiving payments from public authorities. 3 / 5 bis - central bankers'speeches it would also offer the highest possible level of protection in terms of user privacy. only cash offers a level of privacy comparable to the digital euro. and cash will continue to exist. a digital euro would be free of charge for private individuals for its basic functions and could be used both online and offline, that is to say without a connection to the internet, as well as for person - to - person ( p2p ) payments. no other digital means of payment in europe currently offers all these functions. the digital euro would be available to users both via their commercial bank's mobile banking solutions and via a dedicated digital euro app that would be accessible to all users. 6 where do we currently stand with the digital euro? so where do we currently stand with our digital euro project in europe? in october of last year, the eurosystem successfully completed its two - year investigation phase. during this phase, the european central bank and the other central banks in the euro area explored the benefits and implications of the possible introduction of a digital euro. one of the main objectives was to delve deeper into the possible future design of the digital currency. and as you can imagine, this was no walk in the park! that said, we now have a clear idea how a future digital euro could look. we also know from a product design