Jens Weidmann: On the future of money and payments

Panel statement by Dr Jens Weidmann, President of the Deutsche Bundesbank and Chair of the Board of Directors of the Bank for International Settlements, at the Bundesbank virtual autumn conference "Banking and Payments in the Digital World", Frankfurt am Main, 11 September 2020.

Central bank speech  | 
11 September 2020

1 Introduction

Ladies and gentlemen,

The history of money is a story of its gradual dematerialisation from tangible objects to intangible computer code. For example, there once was a time, on the Pacific island of Yap, when huge and heavy, often doughnut-shaped limestone discs were used as money. That is evidently a very tangible form of money, as you can see in places like the Bundesbank's Money Museum where such a Yap stone is on display. Digital money, by contrast, is intangible. It exists only as binary code.

However, the stone money was a less impractical means of payment than you would imagine. Moreover, the similarities with crypto tokens based on distributed ledger technology (DLT) are so striking that some people wonder whether stone money might have inspired the invention of Bitcoin.

One such similarity is that the creation of new stone discs was constrained. The limestone was carved on the Palauan archipelago, some 400 kilometres away, and shipped to Yap. This made it a very resource-intensive process, not unlike the mining of Bitcoin.