TOKENISATION OF MONEY

Michael Salmony 0:12

Hello, my name is Michael Salmony and Ralf and Javier would like to welcome you to another episode of the Payments Trilogue. And this time we have a rather unique configuration. We have Ralf, Javier and myself from the TPT, a host, and we also have Selim and Coşkun and me as book authors who have suddenly who've written this book on tokenisation.

So we have a Venn diagram of two times three people where I am the overlap. So I will try and keep quiet and let

Selim YAZICI 0:45

Okay. Okay.

Michael Salmony 0:49

my co-editors speak and maybe Selim, you could start to explain a little bit where you're from and why we

Selim YAZICI 0:54

Thank

Michael Salmony 0:57

felt it was important to write a book now.

Selim YAZICI 1:00

Hello everyone, this is Selim from Istanbul. Thank you first of all inviting us for this great episode. I believe I have seen maybe 20-25 of your episodes and try to urge my students to at least listen one for themselves. That's great by the way what you're doing.

So I'm Selim

Michael Salmony 1:27

Thank you.

Selim YAZICI 1:28

from Istanbul University. I've been at the university maybe for more than 33 years old. as you know, three of us came together maybe more than 18 months ago, sit at the table, I mean online of course, and started this project.

But when we started this project, we realized something quite surprising. There were many excellent papers about CBDC, many books on blockchain, many books on stablecoins, but there was no single handbook like explaining the entire transformation of money.

At the same

time, we saw that the field was evolving at an incredible speed. CBDCs were moving from research into pilots. Stablecoins were becoming mainstream and tokenised deposits emerged. At the same time, regulations started to mature with MiCAR in Europe and later the Genius Act in the US.

At the same time, banks, fintechs and central banks all started building different versions of digital money. So, as you can see, everyone was talking about tokenisation, but often using different terminology and looking at one piece of the puzzle. Our goal in this book was therefore not to advocate one solution only, but to provide a common language and

a multidimensional framework for understanding the future of money. So, in this book, we try to answer four fundamental questions. Why? What? How? And where? As you know, they are the simplest questions. And through five complementary lenses, we try to look at five complementary lenses, which are technology, sociology, economy,

regulation and as a result from the perspective of strategy. So we try to model this book by looking at those metrics, I mean four by five metrics.

Michael Salmony 3:52

And I think this multi-dimensional thing, is reflected in the over 30 authors we have in the book, is maybe also reflected in the editorship, right? There's you, Selim, who's an academic. There's you, Coşkun, who's a central banker, now also turned academic and myself a practitioner, so to get the different views. So maybe Coşkun, you could tell us a little bit about your view on this topic and its dimensions.

C. Coşkun Küçüközmen 4:18

Yeah. Thank you very much. really, this is a very interesting topic.

And in the last week of June I was in Zurich and I participated in Point Zero Forum and more than maybe sixty percent of the topics centered around the tokenisation and two other important issues. The first one is the codification of trust, the second one is trusted networks, and they were all fed by the

programmable money. So when we think about the codification of trust, you know, money has always been a technology for organizing trust. But you know, it has been embedded in institutions. For example, as a you know ex-central banker, I can tell that you have to trust bank trust banks because deposits are regulated. And trust central bank money because the government stands behind it.

And trust the payment systems because legal systems enforce contracts. In other words, institutional trust comes first, then technology simply deliver it. But today,

the digital technologies are changing this relationship. Instead of relying solely on institutions, many aspects of trust can now be embedded directly into software and the protocols.

And programmable rules. And this is why many speakers referred to as the codification of trust. For example, in traditional finance, trust is established by people, institutions, legal agreements, etc. But in digital finance, trust is increasingly expressed through codes, cryptography, governance mechanisms, and automated execution. So in a tokenised financial market, ownership

Can be verified automatically. Settlement can occur instantly, and compliance checks can be programmed into transactions. So the corporate actions may execute automatically through smart contracts. So

the tokenisation issue and this automatic automisation automatic, not autonomous actually, automisation, will never

eliminate institutions. It will change.

How institutions deliver trust. So trust does not appear, it changes form. So we should also be very careful about this blockchain issue because blockchain never ever removes trust. You know, it's a crypto narrative, but the discussion in Zurich was rather than eliminating trust, trust is being relocated. So instead of trusting,

Paper contracts, manual processes, intermediaries, we increasingly trust governance frameworks, software protocols, cryptographic verification, operational resilience, and regulatory oversight. So all this explains why, you know, many speakers in the forum repeatedly emphasize the future is not trustless, it is differently trusted. Why did I say to you this? Because my chapter in the book is titled.

the stablecoin paradox from decentralized ideals to reintermediation and financial engineering. This is the first part I can say about the you know the codification of

trust. So I can go on later to use the time economically.

Ralf Ohlhausen 7:56

Yeah, could I ask my first question on there you cover the if I'm not mistaken the the the the three different types of tokenising money. So the commercial bank deposits or that we covered here in a in an episode before, then

Well, the the the the central bank version, CBDCs, that we covered many times here, and also stablecoins, which we also had covered, of course. So in in relation to trust, as you just said, which one of those would you trust most? And

So as a central banker, I guess I c I can guess the answer, but no, maybe maybe let me rephrase the the question. So w what are the differences in trust provided by these different types of tokenised money?

C. Coşkun Küçüközmen 8:58

Thanks, Ralf, for your question. First, we have to set aside the central bank digital currency. We are not you know comparing central bank digital currency with other types of currencies because central bank is behind it. But in stablecoins and the tokenisation issue, what matters is the regulation and supervision to ensure trust in the markets. You know, what is important in the payment systems, you know. So you know, if you want to prefer any of them.

You know, people are free to prefer. But there are some certain channels that central bank digital currency currencies cannot flow, you know. For example, USDC, USDT, you know, this these are, you know, and cryptocurrency exchanges. So th these are different types. What matters is, as I said, is the regulation and supervision. So in stablecoins, you know, there should be behind like securitization, behind the coin.

It could be either American dollar or euro or gold. But how much percent are we sure that you know this stablecoin you know reflects the the the real value? So we have to focus on regulation and supervision. But you know the speed is enormous. And you know, the recent statistics I heard in the forum was

More than ninety seven percent of stablecoins today are backed by the US dollars or US Treasury bills. You know, what we need is the perfect, you know, instant supervisor to verify this issue and this will be done probably by codification of trust and programmable money.

Ralf Ohlhausen 10:38

Yeah, but just on that, because yes, as you I think you say reintermediation, well that that you're basically moving from decentralized ideals to but the reality is more a reintermediation. So are we

replacing the well the promise of that

Automatic trust by by a de decentralisation with well now depending on on a few big techs or a few big issuers who are then the intermediaries that you describe and who become gatekeepers.

C. Coşkun Küçüközmen 11:16

Yes. I think this is the most important issue. We are transferring this issue to the you know technologic and the automated networks, but you know, there will definitely be you know say central bank or supervisor or you know, monitoring checks and balances. So it will be provided by the regulatory authorities. Otherwise the system will not work. So

You know, the we we talk about fintech, for example, and but we also talk about RegTech and SupTech. So, you know, regulatory and supervisory technologies, you know, definitely needed. So we are increasingly starting to trust governance frameworks. For example, say airlines, you fly to many different destinations. Do you know any of

the passengers? No. What do you know about the airlines? No. But you trust the whole system because the whole system is tightly regulated.

by air control rules and regulations. So you fly with different airlines and you know, many different passengers, but you're a hundred percent sure that the passengers are fit and proper. So there will be no problem in the plane, you know, during the flight. There's always checks and balances and if there is anything goes wrong, it will definitely be sorted out. So otherwise it will be a problem. So we trust, like we trust the airlines and other things, we need to trust it.

Because we believe that it's regulated and supervised properly.

Javier 12:50

If I may, just to show some disagreement with your last remark, but let's first

C. Coşkun Küçüközmen 12:55

Please.

Javier 12:55

thank you and congratulate you for this amazing book. I can't wait to read it. When I started in banking, I always complained that there were no handbooks, as Selim was saying, about

payments. So it was very limited literature, some only partial aspects, maybe some books on history of money and all that.

Lately, we are seeing that we are repairing the situation and your book comes to also to complete that preparation and brings a lot of new light. I also said once that finance is

the recipe or the cooking recipes or the cuisine of only two ingredients, time and value.

value being represented by money and everything you can do with money and value falls into fineness. But that, as Coşkun was saying, needs a kitchen and the kitchen needs to be trust because we involve human beings. You said that regulation is critical. I do agree, but regulation does not provide the only discipline to these activities. Also, the market provides a lot of discipline.

from a structural point of view. So it brings constraints to the system together with regulation. And I think that the fit in between regulation and the market is what makes things be a success. Regulation alone or regulation misaligned with the market probably leads to no good solutions. So I think that we have to envisage, be it stablecoins, tokenisation of money, whatever, or any...

deposits being tokenised both from those perspectives, what the market really needs and what the regulation has to do so that those needs are covered in an efficient way and providing trust to all participants. That's how I see it, regulation and the market. How do you see it? know I was just challenging you, Coşkun

C. Coşkun Küçüközmen 15:09

And and thank you thank you very much for your comments. You know, why should central banks care about it? Because it's it's you know, if it is not regulated and supervised properly, you know, there will be a you know difficult position in terms of monetary policy and prudential regulation and payment system oversight. So, you know, what we need in this case is the digital identity.

programmable settlement, interoperability standards, governance frameworks, and resilient digital infrastructures. But you know what I see, you know, many companies, many, you know, corporates, you know, are trying to prepare themselves for the near future in terms of stablecoins, the big investment banks like JP Morgan, maybe Goldman Sachs and others, you know, in Europe. So banks are becoming trying to become the architects of trusted digital ecosystems.

And more closely working with the central banks. So this is not the end of the story. The story starts now. And now what we are discussing are the more you know the the most valuable issues, you know, we talk about. So it's it's not an easy issue to reach one conclusion. It's an ongoing process and we can see, we can observe and we can reshape.

Selim YAZICI 16:26

Let me add a few things for you. I like to be in the kitchen as well. So I'm a little bit chef of my own, of course. But that question fits the question we asked in the book. That was our first question. That was the why. So why does money need to evolve? Or in another saying, why do we need another form of money? Because the attention comes from the market.

because today's financial infrastructure was largely designed decades ago. As we are having digital commerce, AI, IoT, programmable assets and ongoing global business all require money that is equally programmable, digital and interoperable. That's why we see that the market needs a change. So that was the pain in the market.

Besides, we have, let me check the exact number, which was 33 internationally recognized contributors. They all coming from 10 nationalities and from many, they all covered all the time zones, which means that they are coming all the kitchens of the world. So the recipe in the book is very rich.

They represent some central banks, BIC ecosystem, commercial banks, fintech companies, payment providers, regulators, and also the academia. So they put all the recipes together and create a fusion kitchen in the book.

Ralf Ohlhausen 18:12

Yeah.

Well there

Michael Salmony 18:13

And I think.

Ralf Ohlhausen 18:13

is it I there was one of the points I wanted to make or questions to ask because yes

the book shows how much is going on around the world. So you cover well many countries, I think Cambodia, Japan, well, everywhere. But coming back to that question of regulation, maybe

Is there any other place in in the world that is regulating as much as we do here in Europe? Because we we have this regulation first attitude. So we wanna be we wanna make it safe. Before we do anything, before we allow anything, we gotta make sure, sure, sure, sure, sure, sure, very sure that it's that it's safe. And whilst we make everything very safe, we get

Overtaken left, right, and center by people who just do things.

So don't you think that don't you have that impression that this is one of the difficulties in Europe and that the other kind the other regions are maybe moving faster?

C. Coşkun Küçüközmen 19:25

let me tell you a few things. you know, the first thing is that, you know, I talk about the trusted network at the very beginning, but it's not a simply blockchain issue. It's an ecosystem in which every participant operates under agreed rules, shared governance and shared legal certainty, technical standards

Selim YAZICI 19:38

Okay.

C. Coşkun Küçüközmen 19:47

and regulatory supervision.

You know, so central banks, commercial banks, payment system companies, regulated stablecoin issuers, digital identity providers, and

Selim YAZICI 19:54

Thank

C. Coşkun Küçüközmen 19:57

financial market infrastructures. They were all there and they talk about it, shape their opinions and talk about the issues that they agree, or there were really small

Selim YAZICI 20:06

Thank

C. Coşkun Küçüközmen 20:09

things to disagree. But you know, for example, the BIS Innovation Hub is mainly working on the projects such as Project Agora and

Selim YAZICI 20:16

you

C. Coşkun Küçüközmen 20:18

Project Aperta probably, you know, if I'm not you know mistaken. And these two projects, you know, they they made a presentation about their projects. So they use, you know, technology and the you know, legal tech and plus, you know, the the the joint work with the countries, you know, not only from the you know European Union and the Basel Committee and there are so many.

countries you know participating in the you know experimental issue. So, you know, the the why why this issue matters for tokenisation? Because you know, it it's generally

Selim YAZICI 20:51

Thank

C. Coşkun Küçüközmen 20:56

misunderstood, you know, because it's not just converting an asset into digital token. This is only the technical part. But the real transformation is that every token represents not only an asset but also a set of trusted relationships.

Selim YAZICI 20:59

So. Okay.

C. Coşkun Küçüközmen 21:13

So it's transferred. You know, for example, you know, a token house government bond is transferred and the system is establishing a lot of things. First, who owns it? Second, is the buyer eligible? Three, the payment or has the payment occurred? Settlement become final. Regulatory requirements, you know, satisfied. And can auditors verify the transaction? This is, you know, the step-by-step, you know, check and verify issues like in the

Selim YAZICI 21:18

So. So

C. Coşkun Küçüközmen 21:42

programmable money. So all these elements individually and altogether require trust. So the objective is to make this trust programmable rather than manual. And why should central banks care? You know, as I said, you know, it's also a threat for the monetary policy if if they didn't run properly. It's a you know big

Selim YAZICI 21:56

Thank you.

C. Coşkun Küçüközmen 22:05

you know trust issue if you fail to

make a regulation in a prudential manner and the payment system oversight is the blood circulation of the whole economy. If anything happens, the economy is down,

Selim YAZICI 22:12

Thank you.

C. Coşkun Küçüközmen 22:19

you know, even for a couple of hours, not minutes, you know, the system is gone. So you know it's it's again you know coming back to you know the technology trust and the main intermediaries making the system more accessible, more easier

More you know, say inclusive than before because we all have you know mobile technologies. You know, have you ever visited a bank recently to make any financial transaction? Have you ever been to there? so if you want to transfer money from one country to another, it takes a couple of days and lots of you know fees and you know other you know things. But you know, in this case, you know, the system, speed and programming, you know, cost.

You know, these are these are charming issues, but we need, you know, your expertise here. Michael, maybe

Michael Salmony 23:14

But I think,

I mean, taking Ralf's question, I think that is symptomatic that there are many views in this whole new emerging ecosystem, right? This tokenisation opens so many new questions, not only about technology, and we've talked a lot about trust, but also about how much should we go into regulation?

Selim YAZICI 23:31

Thank

Michael Salmony 23:33

How much should we leave the market?

There are many, many dimensions to this and nobody yet has the answer, right? There are many people going in different directions, in different geographies, and if you ask regulators, you will get a different answer to if you ask technology providers or central banks. And that's one of the joys of writing this book, is we try to get the opinions from all sides of the market on all these different questions, you know, on regulation, on technology, on trust, on security, and we have controversial chapters, you know, quite consciously so.

Selim YAZICI 23:52

So. So.

Michael Salmony 24:05

I mean, just for example, there's a chapter by the ECB who, of course, wrote how wonderful the digital euro is. And I've written a chapter in there which says, is CBDC a solution looking for a problem, which is slightly more critical? And that's pervades the book that we get opinions from different geographies, from different dimensions, from different market participants. So the reader can then make up his own mind and say, I find this argument convincing and I believe this will happen. I don't so much believe that.

And I think that's one of the enrichments that we hope this book will give everybody when they read it.

Ralf Ohlhausen 24:39

And and and what so what about then exactly that programmable money? Because we we know we heard many times here in Europe and also recently on our episode with Lars Hupel that the ECB and in Europe we want programmable payments, so scheduling payments or whatever, but not programmable money. So the money should not be restricted to any specific purpose.

Selim YAZICI 24:43

So So.

Ralf Ohlhausen 25:09

or expire within six months or so. Well is that yeah, but i is is that different in other in other regions?

Michael Salmony 25:09

Exactly. And actually Lars wrote one of the chapters in the book.

Selim YAZICI 25:13

So. So

Michael Salmony 25:17

Yeah, I mean, you've just heard from Coşkun who's made much of a case for programmability and Lars is a bit more critical on that topic. And that's why I think it's wonderful to read these differences. And we actually tried to... Sorry.

Ralf Ohlhausen 25:30

Yeah, but i i it the

I mean I I think there is there are so many great use cases for programmable money, but of course I can also understand what the concerns are about it. And I think the question is if there if there then is backlash from the people in those countries where they suddenly realize, huh my money isn't valid anymore, it just expired or whatever. Is is there is there any experience with that as all

Selim YAZICI 25:44

So

Ralf Ohlhausen 25:59

reaction of the citizens of a country where that has been tested.

Selim YAZICI 26:01

.

C. Coşkun Küçüközmen 26:08

I did not experience practically, but you know, in theoretically, there were really good definitions during the forum. It's one of them is that it's money with pre-embedded rules. Pre-embedded rules that can automatically execute it conditions using software or smart contracts. So money can decide when, how, and under what

Selim YAZICI 26:30

you

C. Coşkun Küçüközmen 26:33

conditions can it be used. Like you said, you know.

Maybe you know if the if the conditions didn't fulfill in thirty days or ninety days, it's no longer there. So programmable money is the money, you know, flow step by step, step by step, check, control, inform all the parties. So, for example, you know, a government you know issue, disaster relief funds are also can be used as a very good example because it can only spend for medicines. You can only use this money.

Selim YAZICI 27:02

Thank

C. Coşkun Küçüközmen 27:06

To buy medicines or you know food or it expires in 90 days after the disaster. On the payments are made automatically once all eligibility requirements met. You know, you don't you don't give orders one by one, step by step. You make an algorithm of things, you know, embedded issues. So there are lots of benefits, automation, saving time, efficiency, and transparency.

Selim YAZICI 27:13

So.

C. Coşkun Küçüközmen 27:36

reducing the fraud because it's controlled. It's it's it's under everyone's, you know, the old party's control. You know, and so, you know,

Selim YAZICI 27:42

So.

C. Coşkun Küçüközmen 27:45

in central bank digital currencies and the tokenised deposits and the stablecoins, with smart contracts, you can program. Actually, you are not programming the money. You are just programming how should your money behave under certain conditions met, you know, like yes and no, like one and zero.

Selim YAZICI 27:49

So So

C. Coşkun Küçüközmen 28:04

You know, if this is done, okay. If this is done, okay. If this is done, okay. It has been done in you know seconds, less than seconds. So if any problem happens, you know, digital identity of any, you know, suspect of fraud or any other issues, it's not executed. So smart money, programmable money, and you know, codification of trust and trusted networks altogether work under the regulation and supervision and coordination of

you know, parties. it's it's very important. This is why BIS Innovation Hub is trying to set up this new technological issues

Selim YAZICI 28:42

Thanks.

C. Coşkun Küçüközmen 28:43

familiar to all participants, plus a new language is emerging. So you know, can

Selim YAZICI 28:47

So.

C. Coşkun Küçüközmen 28:48

we imagine some five years ago we are talking about

Selim YAZICI 28:50

Thanks.

C. Coşkun Küçüközmen 28:51

programmable money, codification of trust and the you know stablecoins. No, maybe next year we will be talking different issues, but you know, this is just the starting point.

Javier 29:02

But

I think regulation is very singular. In the absence of regulation, what we can see in the market is that the needs are all the same around the world, I

Selim YAZICI 29:10

you

Javier 29:12

would say, more or less, because we are talking about international issues. So more or less, the needs are the same. I would say that technology is at the reach of everybody. So technology is not differential.

Selim YAZICI 29:18

Okay.

Javier 29:24

In technology and in market uses and needs, what makes the difference is the opinions people have on technology and uses. So they can choose to address a niche, to address a request from the market, to use a technology. But when they do that, they do that at their own risk. But then comes regulation. Regulation imposes constraints on everybody and it is discretionary.

Selim YAZICI 29:24

So.

Javier 29:48

So it is made by regulators. If regulation fails,

Selim YAZICI 29:48

Okay. Okay.

Javier 29:53

regulators do not pay. The failure of regulation is paid by the actors, by the players in the market. And that's what makes regulation particularly different and particularly sensitive. I would say it's very delicate because the problem with regulation is that it imposes constraints on everybody except on those

Michael Salmony 29:55

you

Javier 30:16

who issue the regulation, which will not pay if regulation fails. And that

Selim YAZICI 30:17

you Okay.

Javier 30:22

is the risk and I think Ralf was very accurate in his comment. Maybe because regulation is different across the regions in the world, maybe there are some regulations which are better than others and we have to look into that because sometimes failure comes from the regulation and in Europe we have suffered that many times.

Michael Salmony 30:48

Yeah, mean, maybe this part of the answer is that this is an emerging topic, right? I mean, so far, only Europe first, as always, has done the regulation, then the US has sort of partially done regulation and others are thinking about it. So I think it's probably too early to tell which regulation was the right one. But maybe, Selim, you can tell us a little bit because we tried to conclude the book, but since nobody does have the answer and people are going in different ways in

Selim YAZICI 31:12

So.

Michael Salmony 31:16

technological and regulatory and economic. They have different prerequisites. Like in Asia, they do a lot of QR codes. So that had to be the center of tokenisation, which probably isn't the center in Europe. So everybody has their own approach. We tried to do a synthesis at the end where we did

Selim YAZICI 31:21

Thank

Michael Salmony 31:32

some future scenarios. Maybe you can tell us a bit about

Selim YAZICI 31:35

But before that, let me tell us something about what Javier said, because I have a problem of his saying, because there is not a better regulation than the other. The matter is that which fits to which area. So that's a sociological thing indeed, because the market, as you said at the beginning of your speech, decides what is right and what is wrong.

So we can say that the US has its own scenarios. mean, Asia, mostly China, has the most liberal regulations. And the US is trying to keep up with China. And as you know, Europe is the slowest one and trying to keep itself on the safest side.

How about Africa? It is coming from Africa and we saw that many stablecoin approaches or many trials are coming from Africa because they have their own pains. They have their own system. Some of them are not using the smartphones indeed. They are still using the old phones. We call them the old phones, but they are having some genuine innovations on that networks.

I know the South African network, so they're working very well. So at the end of the day, it depends on the behavior of the people and the institutions, because every new form of money changes the initiatives for banks and merchants, fintech customers, governments and central banks have their own initiatives. So with tokenisation, we have the programmable

business models. We're going to see some programmable business models in the very future. Instant settlements, we already have them. Fractional ownership, we saw them in the MENA region, mostly in Dubai. New liquidity models. Embedded finance, we saw them everywhere. And new value chains. They were all going to be introduced by the tokenisation. So,

I can say that money increasingly becomes a platform rather than merely a payment instrument. We usually saw it as a payment instrument, but now we change the role and putting as a platform and we put everything on it in every legislation with every pay. So everything can change. By the way, we had a future scenario at the end of the book.

But maybe Michael can answer the question with the future

Michael Salmony 34:32

Thank

Selim YAZICI 34:33

scenarios because we had many scenarios. We have many use cases. By the way, we wrote those scenarios maybe one year ago. They might be old right now. We have some other episodes from everywhere. So maybe we can...

put them on an open table and leave it for the next chapters or maybe the next books might be. What do say?

Michael Salmony 35:03

I mean, that's a lovely idea, but just to explain to the viewers what this final chapter is, which I think may be the most controversial and for many, some may be the most interesting, I don't know, because we tried to synthesize the different opinions,

right? We already saw that there are many trends and many regulations and many economies and many technologies, and some believe more in programmability and some less. And some see the trust shifting, some don't.

So what we try to do in the final chapter is just do some scenarios because we don't have a crystal ball. don't say this is the answer, how it will all go. But we've developed a handful of scenarios, how we think tokenisation may develop. And I think that may be really interesting and worth debating for a lot of people. We've also been bold and put some probabilities against some of the scenarios where we think these are more likely than others. But we won't reveal these because, of course, we

Selim YAZICI 35:55

you

Michael Salmony 35:55

want everybody to buy them.

Ralf Ohlhausen 36:00

That's a pity. I just wanted to ask. So which which one of the three types do you think will get the biggest share? Stable coins or CBDCs or commercial bank tokens, deposit tokens?

Selim YAZICI 36:13

So.

Michael Salmony 36:13

I mean, if you ask

sort of informally now, because we wrote it more structured in the book, I continue to believe that CBDCs will struggle. We've just seen it all over the world. You know, there used to be 11 live. Now there are three live. And one of them is the Bahamas, which is sort of half dead anyway. And China is trying to push it by now adding interests to CBDCs just in the vain hope of actually making it move.

Selim YAZICI 36:32

So.

Michael Salmony 36:41

So I'm afraid despite many of the good arguments that the ECB brings, I'm not entirely convinced that CBDC will change the world, right? It will add something in Europe, but I don't think it will change the world. Before, I would have said stablecoins are the big thing. I mean, they already have larger volumes than Visa and Mastercard combined.

Selim YAZICI 36:52

Thank

Michael Salmony 37:02

They have more than ACH, the US ACH. I mean, this is a massive development, which

Selim YAZICI 37:07

Yes.

Michael Salmony 37:07

one cannot ignore and which will get ever bigger, that's for sure.

But what we've seen in the last weeks and months is that tokenised deposits are becoming really a forefront runner because the banks want to keep the money to themselves and also don't want to have a lighter regulation, want to be able to use the money. The backing money is not sitting in some archive which they can't lend on. So

Selim YAZICI 37:28

you

Michael Salmony 37:30

a new form is currently emerging and maybe we will see other new forms of tokenised money emerging too. And that's what makes this topic so exciting.

Ralf Ohlhausen 37:38

Yeah, Claus George, who we had here as well on bank deposits. I think he will be glad to hear that. And I think he participated in your book as well. So yeah. All right.

Michael Salmony 37:48

Yes, as I say, we try to get all views from all dimensions.

So I think, has anybody got any burning

C. Coşkun Küçüközmen 37:55

yeah, okay.

Michael Salmony 37:56

points to make, questions to ask?

Javier 37:58

think we'll have to wait some years for your review of your own book to see what happens.

Michael Salmony 38:04

See

how it really turned out. But that's, I mean, I've been in innovations all my business life and some things have turned out the way we all thought. And some of them have been some really big surprises and I'm really looking forward to this new development too. Yeah. Sorry, Coşkun, I think you wanted to say something.

C. Coşkun Küçüközmen 38:20

Yeah. the question by Ralf was quite interesting. he insisted that which one is more reliable, more you know you know efficient

Selim YAZICI 38:30

Which is the best?

C. Coşkun Küçüközmen 38:32

in terms of C B CBDCs and the others. You know, today's stablecoin ecosystem depends heavily on centralized issues like circle and tether, more than 97%. And US last year declared that.

They will not issue CBDCs, no CBDCs, but stablecoins. So true stablecoins, they will definitely double the amount of American dollars circulating globally. You know, it's very important. So, you know, many custodian banks holding reservic assets, regulators overseeing their operations, and ultimately the US Treasury market where the most reserves are invested. It's important. China said that

there will be definitely central bank digital currency only within the Renmimbi area. But you know, a couple of weeks ago, China did not officially declare, but a paper said that China is ready for stablecoins, you know, the infrastructure. It's really important. So how many countries are issuing CBDCs

Selim YAZICI 39:37

Thank

C. Coşkun Küçüközmen 39:38

today? They are only ready to issue. For example, the Nordic countries say that we are now cashless society, okay?

Fine. And you know, digital euro is still, you know, under discussion, under debate. You know, there will be, you know, some big or small question marks. I don't know, Europeans know it better than me. But you know, the CBDC issues is a little bit difficult because the US avoids central bank digital currencies. But, you know, when Javier talk about regulation.

You know, I remembered my lecture notes in the master's course in the UK, the Loughborough University, David Llewellyn professor, he was a very good professor, maybe you some of you know him. And he said that

Selim YAZICI 40:14

So.

C. Coşkun Küçüközmen 40:25

why do we regulate for two reasons. The first one is removing the market imperfections, second, protecting the small investors and depositors. Okay, but so the regulation and the system are getting more and more complex.

Selim YAZICI 40:39

So.

C. Coşkun Küçüközmen 40:42

And we also have a growing cybersecurity threats, you know, under this issue. We used to talk about a couple of years ago, regulatory arbitrage, regulatory capture, and the moral hazard. And Javier has you know pointed out an issue. Have you seen any regulator or supervisor imprisoned because of the lack of supervision

Michael Salmony 41:04

Thank

C. Coşkun Küçüközmen 41:05

or regulation? No. Any banker in prison now? No. Even you know, the book.

The best way to rob a bank is to own it, you know, is fine.

Selim YAZICI 41:14

You

C. Coşkun Küçüközmen 41:17

You you know. Who is responsible for this? The players and you know,

Javier 41:21

Yeah.

C. Coşkun Küçüközmen 41:22

technology itself. So there will definitely be some certain points who is responsible for this legally. Yeah, you are right. And Ralf, you know, great questions. Thank you.

Michael Salmony 41:35

Okay, so unless there are any final points, Coşkun now goes on to the geopolitics, which is another rich vein we could mine, sort of how the US is ensuring its dollar dominance and China, of course, with their global ambitions. But we don't have time for that. So I hope you all enjoyed it. I hope you will all buy the book and I hope you will all watch the next episodes. Thank you very much for being with us.

Selim YAZICI 42:04

Thank you.

Ralf Ohlhausen 42:05

Thank you.

C. Coşkun Küçüközmen 42:05

Thank you very much. Thank

Javier 42:06

Thank you.

C. Coşkun Küçüközmen 42:07

you.

Selim YAZICI 42:07

Bye bye.