We vision a fair settlement system on a global scale
Conduct R&D on behalf of all central banks in a mission to lessen the burden for central banks own in house research and development
Create value and develop solutions to some of society’s grand challenges by being at the forefront of lobbying for the issuance of central bank digital currency, globally
iSETTLE:ORG is an independent, non-profit research organization. The contributions and profits of our research project will be invested in furthering new research
Our goal is to be a world-leading research institute for CBDC
As an R&D partner, we contribute to value creation and increased competitiveness throughout the CBDC project by drafting, testing, developing, and evaluating the central bank digital currency and platform
Our aim of support and R&D in CBDC projects, is to develop a central bank digital currency and platform that could be launched by any Central bank in the future, should it wish to do so
iSETTLE:ORG propose that central bank’s all around the world start developing a pilot project, with the aim of the concept that constitutes a live test of how a finished product or service would function and could be launched
For the last hundred years, the central bank has had a monopoly on issuing cash.
If we continue with the rapid pace cash decline, we see in some societies, states will find themselves in a situation where the roles have changed, and all payments the general public have access to is issued and controlled by commercial companies and institutions. Except for the central bank internal system for payments between banks and financial institutions, private ownership would be in control of the entire payment infrastructure and market.
The demand for physical money is stable, and the demand for electronic payments is increasing all around the world.
High demand for cash in some countries can be explained by its function as a safe store of value and lack of trust in existing value-based systems. In digital oriented and developed countries, cash in circulation as a percentage of GDP is continuing its downward trend. In countries which have a high penetration of trust and functional FinTech solutions serving the general public, we can see that the value of cash in circulation has dropped to half, and that’s even after the financial crisis of 2008.
How does the payment market look in those countries where cash in circulation is at its highest downward trend?
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The Nordic countries are currently a pioneer in regard to digital developments. The Bank-ID apps that enable simple and instant identification have been an enabler and a reason why Scandinavians have been able to adapt relatively quick. In Sweden, local companies are able through their legislation to waive payment in cash if they provide customers with information that they do not accept cash payment.
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Cash has not been made more difficult to get hold of in the high digital penetrated markets, ATMs have been just as many since 2008, but the general public’s withdrawal amount is also declining, a good Indicator that digital payment solutions can be perceived as more easily accessible and convenient use as a means of payment. Even though Swedish legislation gives the merchant the option to refuse to accept cash, it’s never a problem paying in cash in local shops at this time.
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What happens when development spiral towards lower acceptance for cash, and when problems in paying with cash are not accepted, due to the costs incurred by the receiver? When only a few consumers pay in cash, then it stops being profitable to accept.
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An important decision for central banks to produce a CBDC for the general public hinges on whether this development in declining cash use and acceptance is primarily due to consumers and merchants becoming uninterested in using cash. If so, the trend will not be broken just because the central bank stimulates access to more cash, by increasing or maintaining supply.
If the central banks around the world do not decide to act in the face of current developments and choose to leave the payment market to be developed by private payment corporations and private banks, the central bank inactivity in this critical time of change leaves the people entirely dependent on corporations and privately owned payment solutions.
As society continues to adopt electronic payments, it will no longer be profitable for merchants to accept cash in the future. If the trend continues in this ever-accelerating phase, some countries may find themselves in a position where cash is no longer generally accepted by people and retailers in the next decade. When this scenario become true it make it difficult for the Central bank to promote a safe and efficient payment system for the general public.
We want to get involved!
We have the resources and want to contribute to independent research and development – to even out the playing field for every nation’s right to control their sovereign right to control and own their payment infrastructure.
As for R&D partners, we look for those who contribute to value creation and work to increase competitiveness.
The team at iSETTLE:ORG is committed to the mission of developing CBDC market and technology that protects free and instant settlement to secure a better way to achieve instant global settlement.
How a CBDC project could be designed
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At a high-level, its essential to look at how digital currency relates to central bank issued notes (cash), how a CBDC platform could be linked to the existing payment infrastructure and similarities between value-based and account-based digital currency.
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A CBDC would be the same as the nation's currency, a store of value from the central bank that can be stored at the central level or locally in accounts, cards or in a mobile app. The digital currency will act like the states national cash and would have the same value as the currency in the form of cash or money in a private bank account. The digital currency would be without liquidity and credit risk. And the central bank would continue to issue the volume of central bank digital currency demanded by the general public, as cash as is the norm today.
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CBDC would function parallel with cash and be the alternative and complement to cash and payments offered by banks. CBDC platform must be constructed so that banks would be able to instantly exchange money in their accounts for central bank digital currencies. Since the CBDC is digital, this exchange could be made much faster than how it's done with cash today because the CBDC and the central bank account-based payment system are fully interacted.
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A CBDC platform would provide the opportunity for relatively low-cost payments that digital payments generally involve. A CBDC can be used for a person-to-person transaction, e-commerce transaction, payment at point-of-sale in real-time etc. Payments would be available 24/7/365 and transfers made instantly and settled directly.
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Some basic range of services must be produced by the Central bank on the CBDCP to ensure that there are payment services that can be adapted to specific target groups. This is about the broader perspective and the state's role of general inclusion of all individuals and groups. The state cannot expect the private market to cater for full inclusion in the first phase of digitization.
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Digital central bank currency must be simple and convenient to pay with, as cash is today. It must be a system that could conduct multiple payment services that cater to different environments, individuals, and situations. And it must be possible to choose intuitive and straightforward options for payment that everyone can understand.
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It is vital to develop a technical infrastructure for the central bank digital currency platform (CBDCP) so that the FinTech companies and payment service providers that are licensed to operate can join in developing and offering payment services to individuals, households, organizations, merchants and companies.
