N.B. this blog series is a short version of a publication in the special edition on “Next Steps for Digital Currencies” of the Journal of Payments Strategy & Systems, JPSS, Henry Stewart Publications, March 2023.

Please contact the publisher or the author for a reprint


This blog is in three parts. In this, the first part, we reviewed what CBDC is, who is driving this development, what central banks are trying to solve and what the current state of play is. In the second blog we discussed the topic from the point of view of the other stakeholders in the ecosystem (notably end customers, merchants and banks). We saw some of the concerns that have legitimately been raised – whether the original goals are achievable at all, and that there is a real danger that this whole development may be a big global “flop”.  In this final blog we will now look at the advantages to all and why it may actually be worth all of us working together to make this new money a reality.

Should we be doing this at all?

All the critical considerations raised in the previous blogs leads to the the question whether we should all be embarking on the CBDC venture at all. It is likely to cost “as much as building Rome” – not once, but for each country – and will occupy executives, developers, consultants, marketeers for decades. There may be a feeling that the enormous time, costs and management attention needed to make CBDC happen could better be spent elsewhere. There is also the concern that CBDC represents yet another step in the state taking more control in areas where the private sector should act.

In an increasingly electronic payments world where money can already be moved efficiently and privately between bank accounts, phones, wallets, merchants and people, is there really any need for a new, state-driven digital cash?

Some say that the advantages envisaged could better be realised, also by the right actors, just by upgrading the existing infrastructure, by leveraging existing investments and improving them for the modern age. Others, however, fear that the legacy financial services ecosystem will not step up without a quantum shift initiated by regulatory intervention. The truth is, ‘the search for such a [cheap, instant, universal and secure cross-border] solution is as old as international commerce’. Even within Europe (or even within single member states such as Germany), the payments industry has been working towards a harmonised P2P solution for a long time. We have been saying micropayments unlock totally new markets forever. We have been saying that we must increase inclusion. These goals are being worked on — but not always at a hugely satisfying pace. Perhaps what is needed is a big bang — a regulatory push with the potential to make all these topics jump forward. As seen with Pix in Brazil, UPI in India, SEPA/Instant/PSD2 in Europe, if one wants to get large-scale progress in this complex, two-sided, network industry, the regulator needs to initiate the change. Hoping for the existing players to coordinate and raise large funds for the common good has proven to be difficult many times over. This is not due to ill-will or even incompetence; there are simple economic reasons for this: banks, as private economic actors, must put their own interests and those of their stakeholders at heart. Therefore it is sometimes necessary for all to be forced into a macroeconomic common good, when each actor alone does not have a sufficient microeconomic incentive. This is the ‘tragedy of the commons’[1]. Thus, a regulator needs to act and the worldwide community of central banks is now stepping up in a global initiative. CBDC can now – maybe – move the needle on many points such as global harmonisation, inclusion, cash innovation, sovereignty, cost reduction, micropayments, etc.

As CBDC is inevitably coming, and has the potential to bring many important topics forward, it is essential to make the most of it.


We saw in the first blog that there are some good reasons, especially for policy makers, for the introduction of CBDC — however the second blog pointed out that the entire value chain must be engaged and the motivations for consumers, businesses and commercial banks, are much less clear. In any case, there are serious questions, risks and costs (also opportunity costs) that must be balanced against the gains.

We know from experience that everything must be got right in this complex, multi-dimensional topic of payments (it is no good getting everything right but not privacy; it is no good getting everything right and not motivating a critical stakeholder; it is no good if everything is right but someone has no business case). This may all seem rather obvious, but many payment initiatives have failed because one such dimension was not thought through.

Central banks cannot allow CBDC to become too big, otherwise it may crowd out private solutions, seriously impact banks’ balance sheets etc. At same time, however, CBDC must also not become too small or even fail (after the gigantic investments to be made), and this is a true danger if banks are not intrinsically motivated, if merchants and FinTechs find no economic incentive, if consumers do not see a convincing narrative, have surveillance concerns or prefer to put their money in interest-bearing commercial bank accounts rather than zero-interest central bank money.

Interestingly, it is hardly ever the technical dimension that causes new payment initiatives to fail — although most pilots and studies and discussions insist on examining (only) this dimension. It is far more important to focus on whether something really solves a problem, and that all stakeholders are intrinsically motivated. The technologists will work out a good way of making it work at scale later; that is not the critical issue. Any reasonable set of policy objectives can be implemented at scale — the industry has decades of experience in this respect.

Pieces of Eight – the world’s most successful global money
Image Source: Pirates of the Caribbean

CBDC — The modern pieces of eight?

As a vision for the future, this paper proposes the creation of ‘pieces of eight’ for the modern era. The ‘peso de ocho reales’ were the world’s first and most successful global currency. They were used not only across the then world-dominating Spanish empire, which stretched from South America to the Philippines, but also spread across Asia, Europe, Africa and the Americas. They were hugely successful and minted by the billions. They were “the Visa and Mastercard of the 16th through to the 19th centuries”. They were even legal tender in the USA until 1857.

The modern pieces of eight — CBDCs — will not be issued by a central dominant force (neither the Spanish Empire, nor China, nor Facebook) but by all the central banks across the world together. Not as physical metal coins but as a modern, electronic form of cash — with the right balance of privacy, massive innovation, fewer crypto scams, cheaper payments, better inclusion and huge advantages to governments, central banks, commercial banks, end users and businesses alike.

Let us make this vision a reality.

N.B. this blog series is a short version of a publication in the special edition on “Next Steps for Digital Currencies” of the Journal of Payments Strategy & Systems, JPSS, Henry Stewart Publications, March 2023.

Please contact the publisher or the author for a reprint

[1] ‘a social and political problem in which each individual actor is incentivised to behave in a way [eg by not doing anything] that will ultimately be harmful to all’

Dr Michael Salmony is an internationally recognised leader on strategy of business innovations in digital and financial services with a particular focus on Payments, Open Finance, FinTech, Digital Identity, e-Invoicing/SCF and Electronic Money/CBDC. He has particularly close links with Turkey, being strategic partner to FinTech Istanbul (on all matters Open Finance, Platforms, FinTech, APIs, BaaS, Neo-Banking, and further digital financial services), as lecturer on digital finance at the Ozyegin University Graduate School of Business Istanbul, as frequent keynote speaker at several digital finance events in Turkey, as correspondent with various banks, specialist lawyers, relevant corporates etc in Turkey. Globally, he is board-level advisor to major international banks, industry associations, regulators and finance bodies across the world and regularly helps shape future directions in all key decision making bodies (e.g. European Commission/ECB/European Parliament in Europe, and central banks from Japan to Uruguay and Kazakhstan). For the last 10 years he has served as Executive Adviser to the Board of Worldline Financial Services, helping to bring them from a local player to become the world’s 4th largest financial processor of transactional services, which handles over 17 trillion Euro per year. He also works with multiple geographic regions where Digital Finance Innovations are currently emerging - for example with the World Bank in Central Asia, as Board Member of Fintech Africa, as Advisory Board Member to Mastercard in Latin America, etc. His views are much in demand as keynote speaker at international events and he appears on TV/Radio/all electronic media on advances in finance and is quoted extensively (e.g. Financial Times, Harvard Business Manager, New Scientist, The Economist and governments from Ghana to Malaysia). He lectures i.a. at the Oxford Business School on "AI in Fintech and Open Banking" and has published much own original work which has been translated into many languages including German, Italian, Dutch, Finnish, Polish, Danish, Turkish, Russian, Chinese and Japanese. He is extensively networked into the new financial services space and has the top 5% most viewed profile out of the 600 million members in the world’s largest professional network LinkedIn. Previous positions include Director Business Development of leading national central bank (Bank of the Year, Best Innovator Award). Before entering the world of finance, he helped transform companies and business models in many industries as IBM's Director of Market Development Media and Communications Technologies. He studied at the University of Cambridge UK and is married, with two millennial children.