• Agustín Carstens, the General Manager of the Bank for International Settlements, spoke at a Singapore FinTech Festival and described an ideal digital financial infrastructure known as a “unified ledger”.
• This infrastructure would have open architecture to support various projects from both public and private sectors.
• The unified ledger would provide programmability and composability with the potential to combine monetary systems with other registries of real and financial claims.
The Unified Ledger
Agustín Carstens, General Manager of the Bank for International Settlements (BIS), recently spoke at the Singapore FinTech Festival about an ideal digital financial infrastructure he believes would best suit central bankers’ needs. He called this infrastructure a “unified ledger”.
Characteristics of Unified Ledger
Carstens compared the theoretical unified ledger to a smartphone, saying they both work seamlessly with a variety of components. Unlike a smartphone, however, he said that this unified ledger would have open architecture and be programmable and composable — meaning it could run and bundle smart contracts — as well as accommodate projects that use money as payment or settlement where central banks play an important role in its governance while consumer-facing sectors are in private hands.
Benefits of Unified Ledger
A unified ledger has many potential benefits, including allowing users to combine their monetary system with other registries of real and financial claims in one location. It also allows for easy coordination between multiple parties so that transactions can be completed quickly and securely without sacrificing privacy or security.
Central Banks Needed
In order for this system to operate effectively, it is essential that central banks get involved in its design process. By partnering with fintech companies, central banks can ensure that their regulatory requirements are met while still providing access to innovative technologies like blockchain or distributed ledgers that enable faster payments and improved customer experience.
The idea of creating such an infrastructure has been met with major validation from industry players who recognize its potential to revolutionize how payments are made across different countries or jurisdictions. With more coordinated efforts between public and private entities, the unified ledger could help create efficiencies within existing financial ecosystems while providing greater transparency into transactions conducted via digital currency platforms.