The future monetary system
Speech by Mr Hyun Song Shin, Economic Adviser and Head of Research of the BIS, on the occasion of the Bank's Annual General Meeting, Basel, 26 June 2022.
Turmoil in crypto markets highlights short-term risks to financial stability and consumer protection. Beyond these short-term issues are deeper structural flaws that make crypto unsuitable as the basis of a monetary system: the lack of a nominal anchor, the fragmentation of the crypto universe and its reliance on speculation. The future monetary system should build on more solid foundations, as the fusion of enhanced technical capabilities and the core of the trust provided by central bank money. Wholesale and retail central bank digital currencies and retail fast payment systems enable new capabilities such as programmability, composability and tokenisation. Like a healthy tree, the future monetary system can support a diverse ecosystem of private payment service providers, rooted in settlement on the central bank's balance sheet. This vision can support global economic integration and serve society.
