saved articles

Facebook’s proposal Libra, now renamed as Diem, in June 2019 rose from the ashes of the cryptobubble of 2018 and is a stablecoin with serious potential to emerge as a mon-etary alternative with scale (Arner, Auer, & Frost, 2020, pp. 5-6). Facebook with its mas-sive network of users would enjoy of course largescale network effects and would be able to successfully launch their stablecoin on a global scale that no central bank would be able to. Stablecoins such as Facebook’s Libra aimed to address the shortcomings of cryptocur-rencies such as Bitcoin that have shown to be extremely volatile in value (Arner, Auer, & Frost, 2020, p. 6) and aim to keep a stable value as indicated per the name. Stablecoins are the bridge between fiat currencies and DLT that aim to fill in the gaps that crypto-currencies have left blank (Arner, Auer, & Frost, 2020, p. 6). To preserve a stable value such stablecoins are backed with currencies, assets or other cryptocurrencies (so-called asset-linke...

6.1. Flight to Safety/Bank Runs The main concern for commercial banks when it comes to the implementation of retail CBDCs and especially direct CBDCs is the resulting risk of a consumer flight to safety and the consequent risk of bank runs that this creates. At present, bank runs are theo-retically possible but are harder to execute due to physical limitations. During contem-porary bank runs, consumers have to physically go to a local bank branch and line up to get their money. However, the execution of these withdrawals when using retail CBDCs is far easier, where a bank run would then be possible simply with frictionless digital transactions on a computer or smartphone. From this, there is clearly the possibility that retail CBDCs may make bank runs very easy and thus, more probable. This risk may henceforth pose a great risk to financial stability during times of heightened demand for bank deposit withdrawals. In support of this sentiment, Williamson (2021) finds that CBDCs tend to...

Lienhardt & Partner Privatbank Zürich AG is a small private bank in Zurich, Switzerland that specialises in private banking, real estate and financial provision (Lienhardt & Part-ner, 2022). As a small and domestically oriented bank, Lienhardt & Partner’s business is mainly focused on Swiss client savings accounts. This business model naturally includes both conventional equity portfolio diversification as well as investments in the Swiss alternative asset market such as commercial real estate and the nascent “Crypto Valley” ecosystem. Alongside the traditional client relationship management services typical of a private bank, and through its working relationship with the custodial wallet provider Bitcoin Suisse, Lienhardt also has a comprehensive level of in-house knowledge and ex-perience with digital currencies that is relatively atypical for a bank of its nature and size. Thanks to these prerequisites, the firm’s CEO was able to share his insights on the way that Lienha...

The Covid 19 global pandemic has fundamentally reshaped the patterns of consumer purchase behaviour and retail payments infrastructure as we previously knew them. This core shift has also accelerated other payment trends that were underway before the pandemic started, such as contactless payments (Shin, 2020) and the decline of cash usage (Kiff, et al., 2020). While such trends towards digitisation no doubt already exist-ed in part, the possible spread of a deadly virus via cash usage, as well as the increased proportion of remote payments, accelerated the diffusion of mobile and digital payment methods substantially. This preference became prevalent to such a degree that the use of cash was actively discouraged by retailers to avoid contact with customers as much as possible, as well as to reduce the amount of purchasing that was conducted in-person. Furthermore, demographic changes in the world population have seen young adults such as millennials and Generation Z showing a strong pr...