In his Financial Times Free Lunch column, Martin Sandbu discusses our recent Barcelona report (with Stephen Cecchetti, Hélène Rey, and Xavier Vives).

He writes: “The introduction is as good a guide to the main policy issues as I have seen. In particular, it helpfully directs our focus not so much to the technical possibilities digitisation brings as to what they mean for who is empowered and enriched by the systemic changes that can follow…”

Martin continues: “It gives a nuanced discussion of how a retail central bank digital currency (CBDC) can be designed to improve longstanding problems with the current system. And it does a good job of surveying both the risks and the opportunities of ‘tokenisation’ — the representation of claims by digital ‘tokens’ that can circulate through computer networks in decentralised ways — which the authors rightly point out is the key technological development.”

Martin is more critical of the report’s assessment of the relative prospects of tokenized deposits and stablecoins. He interprets this assessment as reflecting a “preference for preserving the two-tier system,” which he does not fully share (nor do we). Lucrezia Reichlin, our distinguished discussant at the online report launch, took a similar position, emphasizing how current euro area plans reflect efforts to protect banks’ business models.

The report is available here. A recording of the online presentation is available here.