In Conversation with Sheila Warren

Central bank digital currencies (CBDC) and stablecoins captured the headlines in 2020, with central banks ramping up their research and pilot projects and the first issuance of a retail CBDC. What sort of developments can we expect in 2021? CBPN caught up recently with Sheila Warren, Head of Blockchain and Data Policy, Member of the Executive Committee of the World Economic Forum, to get her thoughts on the work the WEF is doing to address key questions surrounding digital currencies and their governance.

CBPN: The Digital Currency Governance Consortium (DCGC) and the Policy-Maker Toolkit were launched in January 2020. While many central banks had obviously begun exploring CBDCs by that time, 2020 nonetheless saw the hyper-acceleration of central bank research into digital fiat currency. WEF clearly anticipated this to some degree, but were you at all surprised by the degree to which CBDCs took centre stage in 2020?

Sheila Warren (SW): I wasn’t at all surprised. We had the privilege of guiding a group of central bank technologists in their exploration and learning starting in 2018, so we had an inside view into what they were wrestling with and considering. In fact, our Policy-Maker Toolkit is the direct result of a request that group made, for us to set down some guidance on how to assess whether or not to pursue the issuance of a CBDC, and under what circumstances.

CBPN: In late January of this year, the DCGC released its Vision for 2021 Deliverables, which lays out areas of digital policy and governance that the group will focus on in 2021. Can you talk a little about the three high-level frameworks that you’ll work to establish this year?

SW: Throughout 2020, we brought the entire consortium of about ~90 member organizations together for a series of virtual human-centered design sessions. We used divergent thinking to lay out every material challenge under the sun that the world might encounter along the journey of rollout and adoption of digital currencies. From there, we converged and prioritized which issues, if analyzed and applied to governance frameworks, could have the greatest positive impact on the way that digital currencies are designed, implemented, and used.

Technical questions around what it means for CBDCs and stablecoins to be interoperable and what the spectrum of options are with regard to privacy and confidentiality for retail CBDC were obvious weighty challenges that we knew we wanted to address together. With several international law and trade experts participating, we also knew we could create regulatory frameworks for governing bodies and central banks to use as a guide. And lastly, but most importantly, we are highly focused on representing the Least Developed Countries (LDCs) as well as underserved populations globally. It is imperative that we address the risk that already marginalized people and communities may wind up getting further left behind. To this end, we have created two workstreams: one to research means for financial inclusion and another to study the value of digital currencies for cross-border aid delivery and disbursement.

CBPN: Stablecoins garner considerable attention in the Deliverables document. Outside of the initial regulatory reaction to Libra/Diem, what has been missing in the discussion and research of stablecoins up to this point that makes them such a point of emphasis this year?

SW: The plan was always ...

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