There has been a lot of hype around central banks, interbank payments, blockchains, and central bank digital currencies (CBDCs), but the narrative has become confusing and often misses the point. What’s going on? Actually two independent things are being actively explored:
- Decentralisation of interbank payment systems
- Wider access to digital central bank money (Central Bank Digital Currencies – CBDCs)
I aim to explain them both in this post.
How do banks pay each other? In most countries, when banks want to transfer money to each other, perhaps upon instruction from a customer, they don’t put bundles of banknotes in vans, they pay each other digitally. How does this work?
This post is intended as a primer about payment systems and explains correspondent banking, nostros, real time gross settlement (RTGS) systems and deferred net settlement (DNS) systems. It supports other posts where I discuss decentralisation of these systems using distributed ledgers.
This post aims to explain the various common forms of money that exist today, and the words we use to describe them.
I was honoured to be invited to Brett King’s Breaking Banks podcast to talk about Bitcoins and blockchains with an Asia angle in the “BITCOIN & BLOCKCHAIN IN ASEAN” episode.
Rob Findlay, CEO and founder of Next Money (formerly Next Bank) hosted the conversation, and Marcus Swanepoel, CEO of BitX also shared his insights.
The full audio episode is here and I recommend subscribing to the podcast if you are in to FinTech. A transcript of the relevant section is below, edited for clarity:
How should incumbents, startups, and VCs think about FinTech, disruption, and blockchains?
Over Chinese New Year I read about Professor Clayton Christensen’s fascinating model for identifying and dealing with disruptive innovation, and attempt to summarise it in this post.
Here we learn the differences and dynamics between disruptive innovation, sustaining innovation, and efficiency innovation. Each of them interact with the others, and the appropriate approaches and defence strategies differ. I then provide my own thoughts on how this framework relates to FinTech for incumbents, startups, and venture capitalists.