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How ANZ met the MAS CBDC challenge

ANZ argues national identity schemes can enable banks to operate on top of digital currency.

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Hari Janakirama and Balaji Natarajan, ANZ

The starting point of ANZ’s vision for use cases arising from central-bank digital currencies is to take advantage of existing digital identity infrastructure.

The bank is one of 15 finalists proposing use cases for retail CBDCs in a contest sponsored by the Monetary Authority of Singapore. (DigFin is profiling several of the finalists.)

“A central bank could allow citizens to use its national identity system to register for a central bank-issued primary wallet,” said Hariramchakraborthy (“Hari”) Janakirama, Melbourne-based head of ANZ’s industry innovation team for transaction banking.

“That would allow for fast and direct access to government services, broaden financial inclusion, and make it easier to do business with the government,” he said.

Defining roles

The bank’s proposal doesn’t try to come up with new ways of formulating CBDC design. The writers relied on the extensive body of research on the topic, issued by central banks and other institutions.

Instead, they tried to take the most common model – a hybrid in which banks and other authorized enterprises can compete on top of a basic payments rail – and figure out how it would work, and what it could do.



The main central-bank layer would support payment transactions among consumers and businesses, while a second layer of authorized financial institutions would provide the wallets in which people and firms would manage their digital currency, with smart contracts that provide competing services.

These services would include an offline capability that links the unbanked or financially underserved to central-bank ledgers – crucially to ensure the service worked without internet availability. The paper also looks at security, cryptography, and network performance.

The authors say it is more important to lay out very broad frameworks than drill down on specific use cases.

“The internet changed financial services beginning with TCP/IP [the protocol for internet services],” said Balaji Natarajan, head of the bank’s payments and cash products for Asia in Singapore. “At the time, people wondered what the internet could do. Today we’re asking the same questions, but we know that changes in technology will mean fundamental changes for our operating model.”

Hari added: “CBDCs are a matter of time, so we need to think about how to build the business models to support central banks as they issue digital currencies.”

Bringing back trust

The authors note that the invention of Bitcoin in 2008 proved a payment system can work without intermediaries. But crypto operates outside of regulation. It continues to grow because people like it. Banks like ANZ are looking at how they can help central banks develop decentralized solutions that still involve trusted intermediaries or authorities, in order to tackle broader problems.

For example, CBDCs could help banks execute monetary policy or ensure price stability. They can serve as a mechanism for quickly disbursing government services or emergency relief, including to the underbanked.

ANZ argues the fastest way to make CBDCs useful is to enable their usage through national identity authentication systems, such as Singapore’s Singpass or India’s Aadhaar.

This would allow people who lack bank accounts to still register and use digital money, so long as they have a national ID.

Only a few national ID systems are digital, like Singapore’s and India’s. Most are still physical. But at least it’s a single database of citizens that can serve as a gateway to financial services.

Serving users

Assuming a digital ID system already exists, extending this to support CBDCs is a straightforward tech build. It will take longer for banks and other authorized players to open wallets and build products and services; only a handful of banks are actively preparing for CBDCs.

The biggest unknown is not the tech but consumer reactions. Beyond people who are early adopters, will CBDCs attract broad demand? That will depend on the government services offered and the commercial applications on top.

The submission is a proof of concept, Hari noted. There remain gaps between the idea and the real-world ability to build it and make it work. But the exercise is already creating benefits.

“Technology acts as an incentive for collaboration,” Hari said. “Exploring CBDCs creates incentives for people to share ideas…Our concept is from ANZ, but we’re a bank. We relied on our own developers but we also reached out to the tech world.”

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How ANZ met the MAS CBDC challenge