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Insights and Expertise
ChapterTitle

privacy and untraceability in a digital currency? Unlikely, Figure 1: Existing Instant Payment authorization and
and already a significant divergence from what has made settlement using TARGET instant payment settlement
cash king for so long. (TIPS) service from the European Central Bank. Source:
ECB
But instant transferability of value with a CBDC is
significantly different from existing instant payments, With a CBDC, the money would go directly from my wallet
(or fast payments), as we know them today, which still in Paris to his wallet in Brussels, bypassing any bank
usually rely on a bank network to process the transaction settlement processes. Then, when it comes time to spend
and subsequently to store it. the money, that process too would be a direct transfer of
digital currency from the buyer to the seller, (who could
Today, if I want to send a friend in Belgium money, I can then, for traceability purposes, be obliged to deposit
do it "instantly" from my bank account in Paris to his bank the money—instantly—in a standard bank account).
account (with a German neo-bank) and he can spend the Conceptually, these are very different processes to what
funds in Brussels in less than 10 minutes using a Visa occurs today, but neither central banks nor retail banks are
or Mastercard (see Figure 1). This uses the Eurosystem setting out to disrupt the existing banking ecosystem.
TIPS infrastructure, which, without getting into the
technicalities of it, ultimately relies on a conventional In the second and final article in this series, we'll examine
banking model. the practical challenges of implementing a CBDC, different
models proposed by central banks and whether digital
currency truly solves existing financial problems.

Mark Dillon is solutions marketing director at Ingenico, https://ingeni-
co.com/us-en, a global leader in payment acceptance and service
with advanced integrated solutions and a network of partnerships
that simplify the world of payments and bring value added services to
move commerce forward. Contact Mark on LinkedIn at linkedin.com/
in/markodillon.

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