The Dawn of Digital Cash

Traditional rationales for cash, like accessibility, individual privacy and peer-to-peer resilience are rising to prominence in the CBDC domain.

The prospect of a payment world dominated by big tech companies has focused sovereign issuers on defending retail central bank digital currency (CBDC) as a critical public good. If the joint statement on the digital euro by the European Central Bank and the European Commission is anything to go by, retail CBDC is set to attract even more attention in 2021. Meanwhile, citizens grow evermore conscious of data privacy, as shown by the recent exodus of WhatsApp users to alternatives. Digital central bank currency, self sovereign identity and scalable regulation increasingly resemble what future scholars might refer to as the new societal operating system or SocietyOS.

Perhaps acknowledging the futility of trying to shoehorn underbanked citizens into custodian account silos, sovereign currency issuers are gradually adding policy nuance. Traditional rationales for cash, like accessibility, individual privacy and peer-to-peer resilience are rising to prominence in the CBDC domain. At SICPA, we foresee pioneering approaches which take old constraints and turn them into drivers; we are defining a new era of digital cash within a multilayered trust ecosystem where privacy, compliance, sovereignty and interoperability are served equally – not traded off against each other.

Digital cash should be as easy and confidential as chatting on privacy-focused messaging platforms – but with transaction traceability, digital exchange rituals and rock-solid governance. New bridges linking people with automation – artificial intelligence that seeks human guidance and users who offload routine tasks with confidence – will provide much of the innovation to make this vision a welcome reality.

Editor’s note:  a version of this article appeared in the 1 February 2021 issue of the DMI Journal: Review of the year.