Remarks by Mr Agustín Carstens, General Manager of the BIS, at the ITAM Business Perspectives Seminar: Fintech.

Money is evolving and has been for thousands of years. To avoid the volatility and costs of commodity money's scarcity, societies adopted trusted claims for more stable money. Yet they also learned the hard way that commercial banks and governments have an incentive to overissue, eroding confidence in those claims, damaging economies and society. As exemplified by the Bank of Mexico, today's independent central bank, with a monopoly on bank note issuance and a mandate for currency stability, has evolved through trial and error.

Central bank money exists in accord with money issued by commercial banks. Through this private-public partnership, different money types play different roles. Through access to reserve accounts, market operations and emergency lending at central banks, commercial banks have strong roots to draw on as they issue their own digital money to the public.

This partnership also been a foundation for digital innovations that support one another. Through offering better and faster payment systems central banks have given banks and payment companies platforms on which to offer new safer and more convenient products to the public. In Mexico, we have seen this with the SPEI and CoDi systems. Yet digital innovation is not confined to the traditional partnership. Other innovations have been driven by the lure of payments data and even, for cryptocurrencies, an explicit desire to disrupt the current system.

Many digital innovations are relearning the lessons of the past that drove the evolution of our current system. Cryptocurrencies like bitcoin might have scarcity but this has driven the same volatility and costs seen with commodity money. The move to stablecoins looks like history repeating itself, both in the necessity of a claim to stabilise money but also in how those claims can be undermined.

An alternative to yesterday's failed money types in digital form could be central bank digital currency (CBDC). A significant amount of research is being applied to assess using new technology for use by commercial banks (wholesale) and making digital central bank money available to the public (general purpose). There are still many unanswered questions, especially for jurisdictions with large and complex financial systems yet the BIS is helping drive collaboration to answer them. Two recent examples include: (i) Project Helvetia, a BIS Innovation Hub collaboration experimenting with wholesale CBDC; and (ii) a report on general purpose CBDC with a group of central banks, setting out foundational principles.

Our work will continue, especially as the BIS Innovation Hub expands. Digital innovations will continue too. Yet not all innovations are the same, or even equal. We need innovation in what money can do, not try and reinvent it. Money will continue to evolve and that evolution must be built on trust.

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