Summary results of digital currencies research

At the start of 2021, we organised a webinar with a custodian – Copper - in which we covered a brief look at the ecosystem followed by an effort to separate out some of the facts from fiction. Spurred by the increasing interest in this area, we organised a series of four webinars to delve more deeply into the use of digital assets as an alternative asset class, culminating in a discussion with the main sponsors – Arca and Copper at the recent Festival of Treasury Transformation.

As part of the research for the final webinar, we undertook a short survey of treasurers. The results of this are noted below.

Central Bank Digital Currencies

• We wanted to understand how treasurers felt about the potential adoption of CBDCs.
• 23% felt that retail CBDCs would be important to their business in the next 5 years.
• 31% felt that wholesale CBDCs would be important to their business in the next 5 years.
• 38% felt they could adopt CBDCs within a year and the same percentage felt they needed 3 years. Only 23% felt they needed 5 years to adopt CBCDs.

Our research suggests a degree of optimism amongst this group of treasurers. With the Bank of England noting that it will be at least 2025 at the earliest before a CBDC is launched in the UK, treasurers seem ready to take advantage of the opportunities that CBDCs may offer.

Digital assets/tokens

1. Less than 10% of those surveyed had already been using digital assets and tokens and these were all companies operating in the financial services sector. When asked about their use over the next 5 years, the percentage increased to 67%.

   We know from talking with treasurers that many are keeping an open mind and watching developments in this space. There are a number of different types of tokens (and more emerging on a regular basis) that provide a range of different purposes and it is likely that most treasurers will find at least one of them has a use case that delivers value to treasury activities, customers or suppliers.
    

2. Around 50% of those surveyed had already had conversations with their boards or senior management regarding CBDCs or digital assets.

   It is not surprising this level of engagement given the frequency of headlines focusing on digital assets and tokens. Announcements from central banks such as the ECB, the Federal Reserve and the Bank of England (either on digital assets or CBDCs) adds credibility to the discussions in the media. The purpose behind our education series was to equip treasurers on one specific area and to help inform their conversations with key stakeholders as we believe a lot of work still needs to be done to ensure an informed discussion can take place at a board level.
    

3. We wanted to know how informed treasurers felt and how informed they felt they needed to be. Based on a top score of 10, the average rating for being informed was 4 and they felt they needed to be over 6.

   This suggests that treasurers still feel there is a gap between what they know and what they need to know. Although there are a number of sources available to upskill in this area, many treasurers we spoke with found the ACT’s education series useful in providing an opportunity to understand an area in greater detail rather than remaining at a basic level. A few treasurers felt they knew more than they needed to but interestingly a number ranked the required level of knowledge to be low. Whilst this may reflect the specific circumstances of their business, it suggests that the many heralded benefits can not been fully articulated. It may also be a function of the mindset change that discussions over digital assets requires.
    

4. We wanted to understand better how treasurers viewed the use of digital assets as part of their investment strategy. Over 70% noted that their investment policy prevents the use of an investment that sacrifices security. A similar percentage felt they didn’t know enough to have a conversation with their board and around 60% felt their board didn’t know enough. Although almost 50% of respondents said they had too many other more immediate projects to work on, a few treasurers noted that this was no excuse!

   We expect the debate over the role of any of the over 10,000 different digital assets and tokens to gather speed into 2022 and the ACT will continue to inform its members and update policymakers on their views of the treasury community.

On behalf of the Policy and Technical team I’d like to thank the treasury community for responding to this survey.

Naresh