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This was a most engaging and enlightening discussion between Shaun Ferrari of Currency Research and 2 leading payment experts, John Kiff and Peter Tapling (see bios below).
Summary:
Regulators and central banks are moving quickly to shape the future of digital money. To help you stay ahead of the latest developments and understand its impact on cash and payments, CURRENCY RESEARCH hosted this timely webinar for our IACA members
OVERVIEW of what was discussed:
1.Central Bank Digital Currencies (CBDCs)
Definitions & Scope
Presenters defined CBDCs as digital liabilities of a central bank, available either for:
- Retail use (for the general public), or
- Wholesale use (for banks/interbank settlement).
Most active development today is wholesale, not retail.
They noted that roughly over 100 CBDC projects are underway globally, but only a small number of pilots (e.g., 11–12) are operating in any live capacity.
How CBDCs Are Being Used in Payments
The discussion emphasized that CBDCs—especially wholesale versions—are not aimed at replacing cash. Instead:
- CBDCs are being used to settle transactions between banks or to enable cross-border interoperability, not everyday purchases.
- BIS initiatives (such as Project Rialto) show CBDCs can link different countries’ fast payment systems, creating more efficient cross-border digital money transfers.
- CBDCs primarily shift users from existing digital money to a different form of digital money, rather than creating new use cases.
Key Points Raised
- Retail CBDCs remain unclear in purpose and are not widely adopted.
- CBDCs are unlikely to significantly reduce cash demand.
- Their main function is improving infrastructure efficiency, not changing consumer payment choice.
- Stablecoins
Definitions:
Stablecoins were defined as privately issued digital tokens pegged to a fiat currency, often backed by reserves such as Treasury bills.
Predictions & Market Dynamics
- One expert cited a prediction that stablecoins could generate up to $3 trillion in Treasury demand, because issuers invest reserves into U.S. government securities.
- Merchants and payment processors (e.g., Adyen) already support multiple stablecoins, indicating rapid commercial preparation.
- However, stablecoin use cases vary dramatically depending on whether funds stay “inside the ecosystem” or exit into traditional banking.
How Stablecoins Are Being Used in Payments
Inside the crypto ecosystem
- Roughly 95–96% of stablecoin volume occurs within crypto: buying/selling Bitcoin and Ether, DeFi lending, liquidity pools, etc.
- This is more like asset trading settlement than retail payments.
Real-world retail/cross-border usage
- Real-world usage is still limited but growing in certain environments:
- In Bolivia, stablecoins like Tether are creeping into everyday commerce, with some stores listing prices in both Bolivianos and USDT.
- For cross-border remittances, stablecoins are extremely efficient as long as funds remain digital.
- As soon as someone converts back to local currency:
- FX fees
- off-ramp costs
- bank compliance friction
reappear.
In short: stablecoins are excellent for value transfer, but still constrained for everyday retail spending.
Revenue Models & Frictions
- Today’s issuers profit mostly from interest on reserves (“the carry”).
- If interest rates fall back to near zero, stablecoins will need fees, much like banks and card networks.
- On/off-ramps introduce friction, limiting real-world adoption.
- Tokenized Deposits vs. Deposit Tokens
Definitions
Tokenized deposit
- A digital representation of a bank deposit on a bank’s internal ledger or permissioned blockchain.
- Sender and receiver must both be customers of that bank.
- Mainly an internal settlement efficiency tool.
Deposit token
- A bank-issued token on a public or consortium blockchain, transferrable beyond a single institution.
- Functions more like a regulated, bank-backed stablecoin.
How They Are Being Used in Payments
Tokenized deposits
- Used mostly within a bank to streamline operations—e.g., corporate treasury workflows, internal settlement, or programmable transfers.
- Not used widely for retail payments because usage is restricted to that bank’s customer base.
Deposit tokens
- Still in exploratory or pilot stages.
- Could eventually circulate between banks and customers like a safer form of stablecoin.
- No significant real-world retail volume yet.
Current Landscape
- One large U.S. bank reportedly has over 30 related pilot projects, demonstrating a fragmented and experimental environment.
- Banks are acting more like fintechs—announcing initiatives before standards or demand is established.
- No consensus exists on which digital-money model will win.
- What These Forms of Digital Money Mean for the Future of Cash Use
Key Observations From the Discussion
- None of these digital instruments—CBDCs, stablecoins, tokenized deposits, or deposit tokens—are replacing cash in everyday consumer payments today.
- Where digital currencies succeed, they mostly replace other digital money (bank deposits, payment apps), not physical cash.
- Cash remains:
- universally understood (requires no technology)
- fault-tolerant and offline
- a trusted store of value—especially during uncertainty
- resilient in crises (no outage risk)
Global data still shows rising cash-in-circulation in many regions, even where digital payments grow.
Overall Takeaway on Cash
Digital money innovations are expanding options for digital settlement, trading, and cross-border finance, but:
➡️ They do not eliminate the need for cash.
➡️ Cash continues to serve essential roles that digital systems cannot replicate.
Thus, the future is not “cash versus digital,” but cash AND digital, each serving different needs.
We are so thankful to our following Panelists who shared their important insight:
John Kiff- From 2005 to 2021 John Kiff was a Senior Financial Sector Expert at the International Monetary Fund (IMF). Prior to that, he was at the Bank of Canada for 25 years, where he spent most of his time managing the funding and investment of the government’s foreign exchange reserves, including running its interest rate and currency swap book. At the IMF John was part of the team that produces the semi-annual Global Financial Stability Report covering innovative financial products. More recently he has been focusing on fintech issues and central bank digital currency.
Peter Tapling – Peter is an innovator, advisor, educator, board member and investor at the intersection of payments, risk, and emerging technologies. Prior to founding PTap Advisory, LLC, Peter acted as CCO for Spring Labs, CRO for Early Warning Services, and was founding CEO for Authentify. Peter serves as a strategic advisor and board member for several technology companies with businesses in AI, identity, risk management, and payment enablement across instant payments, cards, ACH, digital currencies, wires and cross border. Peter serves as Vice Chair of the Board of Directors for the U.S. Faster Payments Council, on the Board of Regents for The Payments Institute, and as a technology advisor to the Board of Directors for ePayResources. He chairs the Operations Committee for the U.S. Faster Payments Council and is the project team leader for the Payments Innovation Alliance Quantum in Payment team. He served as a member of the Federal Reserve Scams Information Sharing work group. Peter is a member of the Association for Financial Professionals, an Accredited Payments Risk Professional and an Accredited Faster Payments Professional. Peter has earned certificates from BerkeleyX in Blockchain Technology and Bitcoin and Cryptocurrencies.
MODERATOR: Shaun Ferrari – CCO of Currency Research – Shaun has spent over 25 years in the cash and payments industry. A tenured currency and central banking expert, before joining Currency Research, Shaun spent 16 years at the Board of Governors of the Federal Reserve System where he oversaw all operational and policy aspects of U.S. banknote issuance and processing. Shaun also spent several months with the Digital Dollar Project where he gained extensive knowledge of all things digital assets and digital currencies. He is CR’s go-to currency subject matter expert. Shaun joined CR in 2017 as Managing Director for the Americas region and in 2025 Shaun was appointed Chief Commercial Officer. He develops and implements comprehensive commercial strategies to drive business growth and oversees sales, business development, and sales marketing functions.
