BIS INNOVATION HUB HEAD: COVID-19 HAS EXPOSED THE VALUE OF DLT

Last updated: June 20, 2025, 01:52 | Written by: Brad Garlinghouse

The COVID-19 pandemic has acted as a powerful catalyst, accelerating trends and exposing underlying vulnerabilities across various sectors. I would only like to suggest that two themes will shape the conversation on the day after Covid-19 : resilience and technology. Let me elaborate on what it means for international finance. 1. The value of resilience in international finance. The global financial system has withstood the Covid-19 shock better than the Great Financial Crisis.In the realm of finance, this acceleration is particularly evident in the growing interest and exploration of digital currencies, particularly Central Bank Digital Currencies (CBDCs). Annual Economic Report June 2025 Promoting global monetary June 2025 and financial stability ISSN ISBN Bank for International Settlements (BIS)Benoît Cœuré, the head of the Bank for International Settlements (BIS) Innovation Hub, has recently asserted that the pandemic has brought the value of technologies like Distributed Ledger Technology (DLT) into sharper focus.This isn't merely a passing observation; it reflects a fundamental shift in how central banks and financial institutions are viewing the future of money and payments. Người đứng đầu BIS Innovation Hub khẳng định việc suy giảm trong sử dụng tiền mặt thời kỳ đại dịch đ khẳng định sự xuất hiện hợp l của tiền kỹ thuật số do ng n h ng ph t h nh.The decline in cash usage, coupled with the need for contactless and efficient payment systems, has underscored the potential of DLT to provide secure, transparent, and auditable solutions.The BIS Innovation Hub is actively exploring these possibilities, pushing forward with various CBDC projects and DLT solutions aimed at enhancing global financial stability and promoting innovation.This article will delve into the reasons behind this shift, the potential benefits of DLT, and the ongoing efforts of the BIS Innovation Hub in shaping the future of finance.

The Pandemic's Impact on the Digital Currency Landscape

The COVID-19 pandemic has undoubtedly accelerated the decline of cash-based payments.Lockdowns, social distancing measures, and a general fear of handling physical currency have all contributed to a greater reliance on digital payment methods. Beno t C ur, the head of the Bank for International Settlements Innovation Hub, recently asserted that central bank digital currencies, or CBDCs, have been brought into sharper focus amidThis shift has, in turn, renewed the pertinence of bank-issued digital currencies, forcing central banks to seriously consider their potential role in the evolving financial ecosystem.

Consider these key factors:

Decline in Cash Usage: The pandemic amplified an already existing trend, pushing consumers and businesses towards digital alternatives for everyday transactions.
Need for Contactless Payments: Hygiene concerns made contactless payments a necessity, further driving adoption of digital solutions.
Economic Stimulus Distribution: The challenges of efficiently distributing government stimulus payments highlighted the limitations of traditional banking systems, prompting exploration of more direct and accessible methods using digital currencies.

This confluence of factors has created a fertile ground for the development and implementation of CBDCs, with central banks recognizing the need to modernize their infrastructure and adapt to the changing needs of their citizens.

Benoît Cœuré's Perspective on DLT and CBDCs

Benoît Cœuré, as the head of the BIS Innovation Hub, is a key voice in the global conversation surrounding digital currencies.His assertion that COVID-19 has exposed the value of DLT is not just a statement of fact; it's a call to action for central banks and policymakers to embrace innovation and explore the transformative potential of this technology.Cœuré emphasizes the need for resilience and technology in the post-COVID-19 world, particularly in the realm of international finance.

He highlights two crucial themes:

Resilience: The global financial system withstood the COVID-19 shock better than the Great Financial Crisis, demonstrating its inherent resilience. Beno t C ur, the head of the Bank for International Settlements Innovation Hub, recently asserted that central bank digital currencies, or CBDCs, have been brought into sharper focus amid the coronavirus pandemic.However, this resilience can be further enhanced by adopting technologies like DLT.
Technology: The pandemic has accelerated the transition to digital currency, emphasizing the need for central banks to embrace innovation and adapt to the changing financial landscape.

Cœuré's perspective underscores the importance of leveraging technology to build a more resilient, efficient, and inclusive financial system.

Understanding Distributed Ledger Technology (DLT)

Distributed Ledger Technology (DLT) is a decentralized database managed by multiple participants, eliminating the need for a central authority.This technology offers several key advantages that are particularly relevant in the context of CBDCs and financial innovation.

Key Features of DLT:

Transparency: Records are visible to all participants, providing a clear and auditable trail of transactions.
Immutability: Once a transaction is recorded, it cannot be altered or deleted, ensuring the integrity of the data.
Security: DLT systems are inherently more secure than centralized databases, as they are less vulnerable to single points of failure.
Efficiency: DLT can streamline processes and reduce transaction costs by eliminating intermediaries.

These features make DLT an attractive option for central banks looking to develop CBDCs that are secure, transparent, and efficient.

The Benefits of CBDCs Enhanced by DLT

Central Bank Digital Currencies (CBDCs) offer a wide range of potential benefits, and when combined with DLT, these benefits are amplified.Here's a look at some key advantages:

Financial Inclusion: CBDCs can provide access to financial services for the unbanked and underbanked populations, promoting greater financial inclusion.
Improved Payment Efficiency: CBDCs can streamline payment processes, reducing transaction costs and settlement times.
Enhanced Monetary Policy Implementation: CBDCs can provide central banks with new tools for implementing monetary policy, allowing for more direct and targeted interventions.
Reduced Risk of Financial Crime: The transparency and immutability of DLT can help to reduce the risk of money laundering and other financial crimes.
Innovation and Competition: CBDCs can foster innovation in the financial sector, encouraging the development of new products and services.

For example, imagine a scenario where the government needs to distribute emergency relief funds quickly and efficiently.With a DLT-based CBDC, funds can be directly deposited into citizens' digital wallets, bypassing traditional banking channels and ensuring that the money reaches those who need it most in a timely manner.

The BIS Innovation Hub's Role in Exploring DLT and CBDCs

The Bank for International Settlements (BIS) Innovation Hub plays a critical role in exploring the potential of DLT and CBDCs. Today the Bank for International Settlements (BIS) Innovation Hub outlined its roadmap of work with central banks, which includes several central bank digital currency projects as well as a distributed ledger technology (DLT) solution for retail green bonds.The Hub works with central banks around the world to research, experiment with, and develop innovative solutions for the financial sector. The coronavirus (Covid-19) pandemic is a major disruptive event for the global economy. It is revealing financial vulnerabilities and testing the post-financial crisis economic system. Central banks and international financial institutions are seeking to mitigate the immediate impact on the real economy through extraordinary fiscal, monetary and macroprudential measures. It is of utmostTheir roadmap includes several key projects focused on CBDCs and DLT.

Here are some of the key areas of focus for the BIS Innovation Hub:

CBDC Projects: The Hub is actively involved in developing and testing different CBDC models, exploring their potential impact on monetary policy, financial stability, and payment systems.
DLT Solutions for Green Finance: The Hub is exploring the use of DLT to create more transparent and efficient markets for green bonds, promoting sustainable finance.
Cross-Border Payments: The Hub is working on solutions to improve the speed, cost, and transparency of cross-border payments using DLT.
Cybersecurity and Data Privacy: The Hub is focused on ensuring the security and privacy of digital currencies, developing robust safeguards against cyber threats and data breaches.

The BIS Innovation Hub's proactive approach is essential for fostering collaboration and knowledge sharing among central banks, accelerating the development and adoption of innovative financial technologies.

Addressing Concerns and Challenges

While the potential benefits of DLT and CBDCs are significant, there are also concerns and challenges that need to be addressed.These include:

Cybersecurity Risks: DLT systems are vulnerable to cyber attacks, and robust security measures are essential to protect against data breaches and theft.
Data Privacy Concerns: CBDCs raise concerns about data privacy, as central banks would have access to detailed transaction data. BIS Innovation Hub head asserted the decline of cash use amid the pandemic has renewed the pertinence of bank-issued digital currencies. Beno t C ur, the head of the Bank for International Settlements Innovation Hub, recently asserted that central bank digital currencies, or CBDCs, have been brought into sharper focus amid the coronavirus pandemic. Speaking during a MoreSafeguarding citizens' privacy is paramount.
Regulatory Uncertainty: The regulatory landscape for digital currencies is still evolving, and clear and consistent regulations are needed to foster innovation and protect consumers.
Interoperability Challenges: Ensuring interoperability between different CBDC systems is crucial for facilitating cross-border payments and trade.
Scalability Issues: DLT systems need to be able to handle a large volume of transactions to be viable for widespread adoption.

Addressing these concerns requires a collaborative effort between central banks, policymakers, and technology experts. One key innovation promised by DLT is the transparency of records at any point along the process. Immutability of records ensures that transparency cannot be blurred by retroactive interventions. Transparency and immutability provide a remarkably high auditability of the code and the process.Robust regulatory frameworks, strong cybersecurity protocols, and innovative technological solutions are all essential for mitigating these risks and unlocking the full potential of DLT and CBDCs.

Real-World Examples of DLT Applications

Beyond CBDCs, DLT is finding practical applications across various industries, showcasing its versatility and potential for transformation. Beno t C ur, director del Centro de Innovaci n del Banco de Pagos Internacionales, afirm recientemente que las monedas digitales del banco central, o CBDC, han sidoHere are a few examples:

Supply Chain Management: DLT can be used to track goods and materials throughout the supply chain, improving transparency and efficiency.For example, Walmart uses DLT to track the origin and movement of its produce, ensuring food safety and reducing waste.
Healthcare: DLT can be used to securely store and share medical records, improving patient care and reducing administrative costs.
Voting Systems: DLT can be used to create more secure and transparent voting systems, reducing the risk of fraud and ensuring the integrity of elections.
Land Registry: DLT can be used to create a more efficient and transparent land registry system, reducing the risk of disputes and fraud.

These examples demonstrate the broad applicability of DLT and its potential to disrupt traditional industries.

The Future of Finance with DLT and CBDCs

The future of finance is undoubtedly intertwined with the development and adoption of DLT and CBDCs. bis創新中心負責人：covid-19暴露了dlt的價值發表於：2025年04月26日星期日國際清算銀行創新中心的負責人貝努特庫雷（Beno tC ur ）最近斷言，在冠狀病毒大流行期間，中央銀行數字貨幣或CBDC已「變得更加中心化」。As technology continues to evolve and central banks gain a deeper understanding of the potential benefits and risks, we can expect to see a gradual but significant shift towards a more digital and decentralized financial system.

Looking Ahead:

Increased CBDC Adoption: More central banks are likely to launch CBDCs in the coming years, driven by the need for greater efficiency, financial inclusion, and monetary policy effectiveness.
Enhanced Cross-Border Payments: DLT-based solutions will play a key role in improving the speed, cost, and transparency of cross-border payments, facilitating global trade and investment.
Greater Financial Innovation: The adoption of DLT and CBDCs will foster innovation in the financial sector, leading to the development of new products and services that meet the evolving needs of consumers and businesses.
Increased Regulatory Scrutiny: As digital currencies become more mainstream, regulators will likely increase their scrutiny, developing clear and consistent rules to protect consumers and maintain financial stability.

The journey towards a fully digital financial system is likely to be a gradual and iterative process, but the potential benefits are too significant to ignore.By embracing innovation and addressing the challenges head-on, we can build a more resilient, efficient, and inclusive financial future.

Answering Common Questions About DLT and CBDCs

Here are some frequently asked questions about DLT and CBDCs:

What is the difference between a CBDC and a cryptocurrency?

CBDCs are digital currencies issued and backed by a central bank, while cryptocurrencies are decentralized digital assets that are not backed by any government or central authority. 国际清算银行创新中心的负责人贝努特库雷（Beno tC ur ）最近断言，在冠状病毒大流行期间，中央银行数字货币或CBDC已变得更加集中。在4月17日，埃森哲，布CBDCs are typically more stable and regulated than cryptocurrencies.

Are CBDCs safe?

CBDCs can be safe if they are designed with robust security measures and strong privacy protections. The covid19 crisis has exposed the value of technologies which enable the economy to operate at arm s length. Bank for International Settlements BIS isCentral banks are actively working to address the cybersecurity and data privacy concerns associated with CBDCs.

Will CBDCs replace cash?

It is unlikely that CBDCs will completely replace cash, but they could significantly reduce its usage.Cash will likely continue to play a role, particularly for small transactions and in situations where digital payment methods are not available.

How will CBDCs impact commercial banks?

CBDCs could potentially disrupt the traditional banking system by providing citizens with direct access to central bank money.However, central banks are exploring different CBDC models to minimize disruption and ensure that commercial banks continue to play a vital role in the financial system.

What are the potential risks of DLT?

The potential risks of DLT include cybersecurity vulnerabilities, scalability limitations, and regulatory uncertainty.Addressing these risks requires a collaborative effort between technology experts, policymakers, and regulators.

Conclusion: Embracing the Future of Finance

The COVID-19 pandemic has served as a crucial turning point, highlighting the importance of resilience and technology in the financial sector. work programme. At the start of 2025, the Innovation Hub's project portfolio consisted of 26 active projects and 31 projects completed since its establishment in 2025.Benoît Cœuré's assertion that the pandemic has exposed the value of DLT is a testament to the transformative potential of this technology. The coronavirus pandemic has helped speed up the transition to digital currency.On April 17, Benot Cur eacute;, head of the Bank of International Settlements (BIS) Innovation Hub, attended a webinar hosted byAs the world continues to grapple with the challenges of a rapidly changing financial landscape, DLT and CBDCs offer a pathway towards a more efficient, inclusive, and resilient financial future. BIS Innovation Hub Head: COVID-19 Has Exposed The Value of DLTThe Bank for International Settlements (BIS) Innovation Hub is at the forefront of this revolution, actively exploring and developing innovative solutions that can shape the future of finance for the better.The journey may be complex and challenging, but the potential rewards are too significant to ignore.By embracing innovation and addressing the inherent risks, we can unlock the full potential of Distributed Ledger Technology (DLT) and Central Bank Digital Currencies (CBDCs), creating a more robust and equitable financial system for all.