FinTech, as we lay out in this book, is best understood as including four major elements: first, global wholesale markets where digitisation means speed, crucial for capitalising on information advantages; second, an explosion of financial technology (FinTech) start-ups particularly since 2008 in the aftermath of the Global Financial Crisis (GFC) seeking regulatory lenience that was available to the small but not the large; third, the unprecedented digital financial transformation in retail finance in some countries, particularly China, India, and Kenya; and fourth, the increasing role of large technology companies moving into financial services and digital financial platforms.This long-term process of digitisation and datafication of finance has increasingly combined with the technologies commonly termed ‘ABCD’: Artificial Intelligence (A), Big Data (B), Cloud Computing (C), and Distributed Ledger Technology (D). The latter typically uses blockchains and makes possible the smart contracts that underpin cryptocurrencies and central bank digital currencies. These technologies have together, on the one hand, prompted the need for digital identification and, on the other hand, triggered the extraordinary growth we have seen: Regulatory Technologies (RegTech) and Supervisory Technologies (SupTech).We include all of these aspects of the revolution through which we are all living in the rubric, FinTech. Its ambit is broad and extends from innovations with disruptive effects on existing intermediaries, such as crowdfunding and crowdlending among many others, through to the entry into financial services of the BigTechs and the existential threats they pose to traditional banks.

In this chapter, we talk about three main topics. We first define the issues that a central bank digital currency (CBDC) could address and the reasons to enhance our understanding of CBDCs. Second, we discuss the optimal design principles of a CBDC as they arose from various conversations with central banks, national and supranational authorities, market participants, and academics in various jurisdictions. Finally, we propose a well-rounded and robust solution for a retail CBDC based on Algorand technology which meets these design principles. Most of the content of this chapter is borrowed from the White Paper Issuing Central Bank Digital Currency Using Algorand by Civelli, Georg, Grassano, and Ihsanullah (2022). In that paper, we extensively cover the CBDC design and issuance topics, informed by our recent participation in various pilots, studies, and round-table conversations on these topics.