July 30, 2018

Regional Conference: Digital Currencies and Central Banks’ Regulatory Response 

CEMLA in joint with the Caribbean Regional Technical Assistance Centre (CARTAC) of the International Monetary Fund and the Central Bank of Trinidad and Tobago organized the Regional Conference on Digital Currencies and Central Banks’ Regulatory Response in Port of Spain, on July 19 and 20, 2018.

The Conference was aimed at promoting an active debate on digital currencies and related technologies as well as other innovations in financial sector that are challenging the current regulatory and policy framework in the Caribbean Community and internationally. 

One important lesson from the discussions held in the Conference is that the financial industry, central banks, and the international community are paying special attention to the developments and prospects of emerging technologies underpinning digital currencies, including blockchain and others, given the potential applications these developments may have in existing business products and models. In the case of Latin America and the Caribbean, innovations have brought new opportunities to deepen financial access and improve market competition, but at the same time, these developments open the discussion about important and new risks given the fact that monetary and financial stability are challenged with the presence of new technologies and a renewed financial ecosystem.

It was addressed that an increasing number of projects testing these technologies have aroused all over the world, including a few of them to digitize currency of legal tender. In particular, the attendees learnt that important applications of digital currencies related technologies are already under discussion, including the redesign of certain market infrastructures or the functioning of a new model of cross border payments to deal with derisking. 

The ongoing projects in the Bank of Canada (Project Jasper) and in the Central Bank of Uruguay (E-peso) were presented in the Conference, an important takeaway of both presentations is that that new financial technologies have proved to be functional, and ongoing evaluations are taking place to assess the potential of change for the current financial ecosystem.

An important conclusion of the Conference is that as result of this changing landscape, a regulatory and policy response from central banks is expected and, more importantly, desirable. It was underlined that the response cannot be of the type of “one size fits all”, but even in consideration of the different local circumstances, there are aspects and approaches that deserve to be shared within the community of central banks as the challenges stemming from these new technologies may be similar from one jurisdiction to another.

In this context, it was also concluded that the Conference was a very timely occasion to exchange knowledge and relevant experience related to how central banks are facing the various implications of digital currencies and other important innovations.