Discurs cu ocazia evenimentului "Unchain Fintech Festival"

Csaba Bálint, membru CA al BNR

I am delighted to be here today, in the charming city of Oradea, my hometown. I would like to thank the organisers for inviting me to share some ideas and discuss briefly the progress we made at the National Bank of Romania regarding CBDC (Central Bank Digital Currency). Moreover, I would like to applaud the organisers for bringing together regulators, banking and finance professionals, software engineers and entrepreneurs to foster the dialogue between us.

I’ve always been fond of history and although it does not repeat itself, it does indeed often rhyme as Mark Twain said. I don’t know how many of you are aware, but on this exact spot we gathered here today, the city of Varadinum (as Oradea was named in the old Latin texts) flourished during the Renaissance. During those days, Oradea was at the crossroads of commercial routes connecting the Orient with the Occident, such as it is today at the heart of CEE for innovation in financial services. The old walls that used to protect the city in the middle ages have now turned into a FinTech fortress and are today shielding and inspiring a new army, but this time, an army of entrepreneurs and visionaries.

Between 1464 and 1667, a prime meridian such as the one from Greenwich was set in the Fortress of Oradea by Georg von Peuerbach, the famous astronomer and his colleagues who worked at the Observatory of Varadinum and wrote Tabula Varadiensis in 1464. Perhaps the most prominent explorer and navigator, Christopher Columbus stated that he had one copy of Tabula on board of his ship to calculate the actual meridian based on the position of the Moon, in correlation to Oradea. Although the people I see today in front of me are not navigators, they are bold and driven by the same urge as Columbus to discover, conquer new worlds, disrupt and innovate. I’m thrilled to see that Oradea is becoming again the centre of the world, the ground zero for innovation, for a few days, at least.

We’ve witnessed lately a true effervescence in the FinTech market in the CEE region. We’ve seen major developments in payments, investments, personal finance and digital currencies. I believe that the FinTech landscape is still maturing and it’s transforming financial services at a great pace. I enjoy watching this process and I think this might be the best place to observe Joseph Schumpeter’s “creative destruction” concept in action. Schumpeter characterised creative destruction as “innovations in the manufacturing process that increase productivity”. In his vision, innovative entrepreneurs were the disruptive force that sustained economic growth, even as they destroyed the value of established companies. Ultimately, our life is improved by innovation and the world is lifted out of poverty by innovative approaches.

The international monetary system may see the emergence of central bank digital currencies in several economies, including Romania. Such CBDCs would offer benefits in terms of efficiency, liquidity and safety that would support their attractiveness internationally. However, we also need to examine the risks to monetary policy transmission and financial stability that could be associated with CBDCs and not only consider the payments landscape of today but also anticipate how it may evolve in the future.

In 2021, the National Bank of Romania established the Cryptocurrency and Digital Currency Office. Our pilot CBDC programme is based on the Corda platform, which uses the main principles of the blockchain platform. The network is a decentralised private network, where the NBR, as owner, determines who may join as a participant. We consider a two-tiered model to have some advantages over the direct, one-tier model.

Given the stage of advancement of our country and considering foremost the cultural aspects of our society, it is obvious that we cannot estimate "if" or even more so "when" cash will disappear, since it is perceived by the population as an essential service that is provided to them.

The journey ahead will certainly be an engaging one for central banks and for the entire FinTech ecosystem. We shall encounter many challenges as well as opportunities along the way. Nevertheless, as Columbus managed to discover a whole new world full of possibilities using a tool that had Oradea at its core, perhaps starting from here, today, we can also take a huge leap forward and make history. To quote the most influential entrepreneur of our generation, Elon Musk: “Success is within the set of possible outcomes”.

Thank you very much and I wish you a rewarding discussion.

Oradea, 13 iulie 2022