Lecture 11: CBDCs & the Future of Money
Wholesale vs retail design · Digital Euro · e-CNY · programmable money
11.1 Course objectives
- 11.1 Course objectives
- 11.2 Recap from Lecture 10
- 11.3 What’s a CBDC
- 11.4 The Digital Euro
- 11.5 e-CNY and small-country implementations
- 11.6 Programmable money
- 11.7 Stablecoins vs CBDCs
- 11.8 Conclusion of Lecture 11
Welcome to Emerging Technology & Finance
- This is a flipped-classroom Bachelor course: every regular lecture (odd weeks) is followed by a flipped session (even weeks) where all groups present on the same topic. There is no exam to register for — sign up on the course Moodle page by 15 October 2026 so you receive announcements and the token-allocation quiz links.
- Form a group of 4 by the end of Week 1 (Moodle sign-up sheet). Stragglers will be allocated by the lecturers.
- Grading is 100% cumulative across the 6 flipped sessions: each session = 50% peer-allocated tokens + 50% lecturer evaluation. Each group gets 20 fresh tokens every flipped week to allocate to other groups via a Moodle quiz within 5 minutes of the session ending.
- Submission per session: upload your slide PDF to Moodle before each flipped session starts. Ask questions during or right after each session — that is the preferred channel.
- Admin / studies / exam-eligibility questions go to the registrar’s office (Studiensekretariat) at studiensekretariat@uni-ulm.de.
- Course-content questions outside class: email oliver.padmaperuma@uni-ulm.de, CC andre.guettler@uni-ulm.de.
- We also recommend the student advisory service.
Course Objective
Scope
We will:
- Survey six emerging-technology modules at the cutting edge of finance: agentic AI · blockchain & DeFi · fintech business models · RegTech & cybersecurity · CBDCs
- Pair every regular lecture with a flipped session in which every group presents their angle on the topic
- Train critical evaluation, presentation, and peer-judgment skills via a transparent token-based peer-grading mechanic
- Place the technologies in a real-world business and regulatory context (PSD2/3, MiCA, EU AI Act, post-quantum standards)
We will NOT:
- Build production-grade fintech systems or trade live capital
- Cover deep technical implementations (we treat code as supplement, not core)
- Run a separate written exam or final-pitch competition — the cumulative flipped-session grade is the entire grade
Approach
Flipped-classroom alternation (12 weeks)
- Odd weeks (W1, W3, W5, W7, W9, W11): regular lecture introducing the topic
- Even weeks (W2, W4, W6, W8, W10, W12): flipped session — all groups present and allocate tokens
- Groups of 4, formed by end of Week 1
Token mechanic (the grading vehicle)
- 20 tokens per group per flipped session
- Each group allocates them to other groups, weighing insight · originality · clarity · critical depth
- Cumulative across 6 sessions = 50% of final grade · lecturer evaluation = 50%
Course at a glance (1/3)
Foundations of Digital Disruption in Financial Services
What is ‘emerging tech in finance’, how did we get here, where is it going
- Three waves of digital disruption in finance
- Today’s actors: incumbents, challengers, Big Tech, infrastructure
- Regulatory backdrop: PSD2, MiCA, EU AI Act
- Why now: structural drivers
- What this course will cover
Flipped — Digital Disruption in Financial Services
Group presentations · token allocation · discussion
- Recap of the foundations lecture
- Group presentations on digital disruption
- Token allocation & next steps
Agentic AI & LLMs in Finance
From LLMs to agents · applications · failure modes · EU AI Act
- LLMs in finance: architecture, training, capabilities
- Agentic AI: from answers to actions
- Applications: RAG, robo-advisors, AML, trading agents
- Failure modes: hallucination, drift, prompt injection
- Governance: EU AI Act and high-risk obligations
Flipped — Agentic AI & LLMs in Finance
Group presentations · token allocation · discussion
- Recap of the agentic AI lecture
- Group presentations on real LLM and agent deployments
- Token allocation & next steps
Blockchain, Crypto, DeFi & Tokenisation
From distributed ledgers to MiCA-regulated markets
- Blockchain primer: ledgers, consensus, smart contracts
- Crypto markets: BTC, ETH, stablecoins
- DeFi primitives: AMMs, lending, derivatives
- Tokenisation of real-world assets
- MiCA framework and EU enforcement
Course at a glance (2/3)
Flipped — Blockchain, Crypto, DeFi & Tokenisation
Group presentations · token allocation · discussion
- Recap of the blockchain & DeFi lecture
- Group presentations on real protocols and deployments
- Token allocation & next steps
Fintech Business Models
Neobanks, embedded finance, BNPL, Open Banking, Big Tech in finance
- Neobanks: N26, Revolut, Monzo, Chime
- Embedded finance & BaaS
- BNPL: Klarna, Affirm, regulatory pushback
- Open Banking & PSD2 outcomes
- Big Tech in finance
Flipped — Fintech Business Models
Neobanks, embedded finance, BNPL · group presentations · token allocation
- Recap of the fintech business-models lecture
- Group presentations on real companies and unit economics
- Token allocation & next steps
RegTech, Cybersecurity & Privacy-Preserving Compute
Industrialising compliance · cyber-threat landscape · ZKPs, MPC, federated learning · post-quantum
- RegTech overview: industrialising compliance
- KYC/AML automation in production
- Cybersecurity threats in finance
- Privacy-preserving compute: ZKPs, MPC, federated learning
- Post-quantum cryptography & the migration
Flipped — RegTech, Cybersecurity & Privacy-Preserving Compute
Group presentations · token allocation · discussion
- Recap of the RegTech & security lecture
- Group presentations on vendors, incidents, and emerging tech
- Token allocation & next steps
Course at a glance (3/3)
CBDCs & the Future of Money
Wholesale vs retail design · Digital Euro · e-CNY · programmable money
- What’s a CBDC: wholesale vs retail
- The Digital Euro state of play
- China’s e-CNY and small-country implementations
- Programmable money: feature, threat, or both
- Stablecoins as private money: tension with CBDCs
Flipped — CBDCs & the Future of Money
Final session · group presentations · token allocation · course wrap-up
- Recap of the CBDCs lecture
- Group presentations on real CBDC projects
- Token allocation, final standings, and course retrospective
Assignments / Exams
Flipped-Classroom Presentation Series 100% of your grade
Six in-class group presentations across six emerging-tech topics, graded cumulatively. Each session: 50% peer-allocated tokens + 50% lecturer evaluation.
Group of up to 4.
Submit by emailing oliver.padmaperuma@uni-ulm.de, CC andre.guettler@uni-ulm.de. Subject pattern: Emerging Technology & Finance_assignment-1-flipped-classroom-presentations_surname1_surname2_…
21 January 2027
11.2 Recap from Lecture 10
- 11.1 Course objectives
- 11.2 Recap from Lecture 10
- 11.3 What’s a CBDC
- 11.4 The Digital Euro
- 11.5 e-CNY and small-country implementations
- 11.6 Programmable money
- 11.7 Stablecoins vs CBDCs
- 11.8 Conclusion of Lecture 11
What the flipped session surfaced
- Which RegTech vendor claims actually held up under scrutiny — usually the ones with public regulatory partnerships, not the ones with the loudest AI claims.
- The most consequential cyber-incident lesson: third-party supply-chain is the dominant attack vector for 2024–26, and DORA is the regulator’s specific response.
- Whether the post-quantum threat felt urgent or theoretical to the cohort — and the harvest-now-decrypt-later argument that usually shifts that perception.
Notes
The Week-10 flipped session ran after the Christmas break — usually a high-energy session because groups had time to do real research. The pattern across the strongest presentations was distinguishing maturity: which RegTech vendor products are deployed at scale vs which are demo-stage; which privacy primitives are in production vs research; which post-quantum migrations have started vs are still scoping. Today’s lecture is the last regular lecture of the term. It covers CBDCs — the single most politically loaded topic in the course, where the design choices are constitutional (what is money, who can hold it, how anonymous can it be) rather than purely technical.
11.3 What’s a CBDC
- 11.1 Course objectives
- 11.2 Recap from Lecture 10
- 11.3 What’s a CBDC
- 11.4 The Digital Euro
- 11.5 e-CNY and small-country implementations
- 11.6 Programmable money
- 11.7 Stablecoins vs CBDCs
- 11.8 Conclusion of Lecture 11
Three pieces of one phrase
- Central-bank — issued and guaranteed by a central bank (not a commercial bank, not a stablecoin issuer).
- Digital — purely electronic; cash equivalent without physical form.
- Currency — legal tender denominated in the sovereign currency.
CBDCs are not new technology — they are a new political-economic arrangement around digital money.
Notes
The technology of a CBDC (tokenised liabilities, distributed registries, account-based or token-based ledgers) is well-understood and not controversial. The design choices that matter — who can hold, how anonymous, what conditions can be attached, who intermediates — are political. This is the central insight of Brunnermeier, James, and Landau’s framing: digital money is a contest among issuers (central banks, commercial banks, stablecoin issuers, BigTech), and CBDCs are central banks’ assertion that they will not cede the digital currency landscape to private money (Brunnermeier, James, and Landau 2019).
Wholesale vs retail
- Users: commercial banks, large institutions.
- Purpose: interbank settlement, cross-border payments.
- Design: less politically charged; effectively a modernised reserve-account system.
- Examples: BIS Project Agorá, Project mBridge (paused), Banque de France wholesale pilots.
- Users: retail consumers and businesses directly.
- Purpose: digital alternative to cash; financial inclusion; defence against private digital money.
- Design: politically charged — privacy, holding limits, intermediation, programmability all contested.
- Examples: Digital Euro, e-CNY, Sand Dollar, eNaira, e-krona (pilot), DCash.
Notes
The wholesale/retail distinction is the most important taxonomy in CBDC discussions. Wholesale CBDC pilots are mostly running quietly with low controversy — they replace existing reserve accounts with tokenised equivalents and improve interbank-settlement latency. Retail CBDC is where the political stakes are: what’s the cash-substitute promise, who intermediates the consumer relationship, and what privacy commitments are enforceable by design rather than by policy (Auer and Böhme 2020). Most political and journalistic discussion conflates the two; the strongest Week-12 presentations will keep them separate.
11.4 The Digital Euro
- 11.1 Course objectives
- 11.2 Recap from Lecture 10
- 11.3 What’s a CBDC
- 11.4 The Digital Euro
- 11.5 e-CNY and small-country implementations
- 11.6 Programmable money
- 11.7 Stablecoins vs CBDCs
- 11.8 Conclusion of Lecture 11
Where the ECB is in 2026
- Investigation phase (2021–23) — design exploration, stakeholder consultation.
- Preparation phase (2023–25) — detailed design, regulation drafting, technology selection.
- Decision expected in 2025–26 by ECB Governing Council.
- Design choices being finalised: intermediated distribution (banks distribute, ECB issues), holding limits (€3,000 per person discussed), privacy by design (cash-like for small transactions).
Notes
The ECB has been deliberately patient about the Digital Euro — investigation phase took two years and preparation phase another two. The political reception is mixed: ECB pushing, commercial banks anxious about disintermediation (a CBDC that’s too convenient erodes their deposit base), consumers ambivalent. The single most consequential design choice still under negotiation is the holding limit: too low, and the Digital Euro is irrelevant; too high, and it disintermediates banks during a stress event when consumers might rush from bank deposits into ECB-issued money (European Central Bank 2023).
What’s actually contested
- Holding limits — €3,000 per person commonly proposed. Lower limits protect bank deposits; higher limits make the Digital Euro useful.
- Privacy — ECB commits to “cash-like privacy for small transactions”; the threshold at which AML reporting kicks in is contested.
- Programmability — ECB has consistently rejected fully programmable Digital Euro; some politicians and central bankers want richer programmability.
- Offline functionality — peer-to-peer offline payments are technically feasible (token-based design) but operationally complex (device-side wallets, double-spend prevention).
Notes
Each of these contested design choices interacts with the others. High holding limits + full privacy + full programmability is incompatible — you cannot have all three because they constrain each other (e.g. AML obligations require some traceability, which limits privacy; programmability requires identifiable holders, which limits anonymity). The Digital Euro design exercise is really a trade-off-frontier exercise: pick which two of three properties matter most. The ECB’s choice so far has been intermediation + cash-like-privacy-with-AML-threshold + limited-programmability — a defensible middle path that satisfies few stakeholders fully (European Central Bank 2023).
11.5 e-CNY and small-country implementations
- 11.1 Course objectives
- 11.2 Recap from Lecture 10
- 11.3 What’s a CBDC
- 11.4 The Digital Euro
- 11.5 e-CNY and small-country implementations
- 11.6 Programmable money
- 11.7 Stablecoins vs CBDCs
- 11.8 Conclusion of Lecture 11
China’s e-CNY
- Largest pilot in the world by volume — cumulative transaction value reported by PBoC at ~$250B+ by mid-2024.
- Two-tier system — PBoC issues; commercial banks distribute via wallets (similar in structure to what ECB proposes).
- Surveillance properties — PBoC can see transactions; commercial banks cannot (a deliberate design choice).
- Uptake — large in mandated use cases (government salaries, transit, lottery distribution) but modest in spontaneous consumer adoption.
Notes
The e-CNY is the most-deployed CBDC in the world and a useful case study for the “what does adoption mean?” question. Cumulative transaction value is large but most of it flows through mandated use cases: government employee salaries paid in e-CNY, transit subsidies, distribution of welfare and stimulus. Spontaneous retail adoption — choosing e-CNY over Alipay or WeChat Pay for a coffee — is much smaller. The lesson for other jurisdictions: deploying a CBDC is operationally feasible; making it spontaneously preferred over existing digital-payment rails is much harder (Bank for International Settlements 2023).
Small-country CBDCs
- Launched 2020.
- Designed for financial inclusion across archipelago geography.
- Modest uptake; struggles with merchant-acceptance network.
- Launched 2021.
- Very low retail uptake despite government mandates.
- Honest lesson: deployment without ecosystem fails.
- Multi-year pilots; no launch decision yet.
- Sweden has unusually low cash use → strong motivation.
- Cautious approach reflects unique demographics.
- Eastern Caribbean Currency Union pilot.
- Suffered a multi-month outage in 2022; informative postmortem on operational resilience.
Notes
The pattern across small-country CBDC launches is striking: technical launch ≠ user adoption. Building a CBDC ledger is the easy part; building a merchant-acceptance network that wants to use it is the hard part. Nigeria’s eNaira is the canonical cautionary tale — government mandates couldn’t overcome the existing mobile-money network effects. The contrast with M-Pesa in Kenya is instructive: M-Pesa was built around a merchant agent network first and the payment system second (Jack and Suri 2014). CBDCs that follow the M-Pesa pattern (ecosystem-first, technology-second) have a much better chance of adoption than those that follow the eNaira pattern (technology-first, hope-for-ecosystem).
11.6 Programmable money
- 11.1 Course objectives
- 11.2 Recap from Lecture 10
- 11.3 What’s a CBDC
- 11.4 The Digital Euro
- 11.5 e-CNY and small-country implementations
- 11.6 Programmable money
- 11.7 Stablecoins vs CBDCs
- 11.8 Conclusion of Lecture 11
What “programmable” can mean
- Conditional payments — funds release only when condition X is met (smart-contract-style escrow). Widely accepted.
- Expiring money — funds revert after a date if unspent (proposed for stimulus and welfare). Controversial.
- Targeted money — funds usable only at certain merchant categories (e.g. groceries-only welfare). Very controversial.
- Auditable money — every flow logged; tax compliance automatic. Divisive across ideological lines.
Notes
The political controversy in CBDC design tracks closely with the form of programmability. Conditional payments (escrow, escrowed-for-delivery) are uncontroversial because they replicate existing legal arrangements. Expiring money is controversial because it strips a holder’s optionality. Targeted money is doubly controversial because it can be weaponised against unpopular groups. Auditable money divides on ideology — proponents see efficient tax compliance, opponents see unprecedented surveillance. The constructive question for a Bachelor finance audience is: which forms of programmability should be technically possible in a CBDC, and which should be design-excluded? The ECB’s answer so far is to design-exclude most beyond conditional payments (Brunnermeier, James, and Landau 2019; Bank for International Settlements 2023).
The civil-liberty trade-off
- Automated tax collection reduces evasion and improves fairness.
- Programmable welfare can target real needs more precisely.
- Conditional payments reduce fraud in B2B transactions.
- A cash-like CBDC + opt-in smart-money options gives consumers both.
- A government that can expire your money has unprecedented coercive power.
- “Targeted” welfare can be weaponised against unpopular groups or dissenters.
- Surveillance enabled by audit goes beyond historical norms even for digital payments.
- Once programmable infrastructure exists, scope creep is hard to reverse.
Notes
This trade-off is genuinely political — there is no technologically-determined right answer. The role of this slide in the course is to make the trade-off visible rather than to declare a winner. A useful framing for the cohort: the legitimacy of programmable money depends entirely on the legitimacy of the institution wielding the programmability. In a stable rule-of-law democracy with strong civil-liberty protections, expiring stimulus might be acceptable; in less stable jurisdictions, the same feature is a tool of repression. Design choices that look acceptable today may be exploited differently tomorrow under different political conditions (Brunnermeier, James, and Landau 2019).
11.7 Stablecoins vs CBDCs
- 11.1 Course objectives
- 11.2 Recap from Lecture 10
- 11.3 What’s a CBDC
- 11.4 The Digital Euro
- 11.5 e-CNY and small-country implementations
- 11.6 Programmable money
- 11.7 Stablecoins vs CBDCs
- 11.8 Conclusion of Lecture 11
Two forms of digital money
- Public liability of the central bank.
- Risk-free by construction (in the issuing currency).
- Politically constrained — anonymity, programmability, intermediation.
- Slow to deploy (Digital Euro timeline: ~5+ years from investigation to launch).
- Private liability of an issuer.
- Risk depends on backing — cash + T-bills (USDC) vs corporate paper (former USDT) vs algorithmic (UST collapsed) vs delta-hedged (USDe, novel).
- Fast to deploy — USDC scaled to $50B+ in 4 years.
- MiCA-regulated in the EU since 2024.
Notes
The realistic 5-year outcome is co-existence with regulatory boundaries, not a winner-take-all contest. CBDCs likely dominate sovereign-anchored payments inside their issuing jurisdiction; regulated stablecoins (USDC, PYUSD) likely dominate cross-border B2B settlement; mixed adoption at the retail level. The single most consequential variable is regulator choice: a stablecoin-friendly regime (US under expected 2025–26 legislation) vs a CBDC-prioritised regime (EU) produces very different equilibria. Cite Bank for International Settlements (2023) and European Parliament and Council (2023).
Will stablecoins or CBDCs win the wallet?
- For most retail users, the question is unlikely to be a hard choice — wallets will hold both, and the consumer will not distinguish them at point of sale.
- For B2B and cross-border, regulated stablecoins have a 2–3 year head start that may be hard to reverse.
- Regulator choice is the deciding variable: stablecoin-permissive regimes (US under expected 2025–26 legislation) vs CBDC-prioritised regimes (EU) produce different equilibria.
- The interesting failure mode: what happens if a major regulated stablecoin (USDC or USDT) depegs significantly in 2027?
Notes
The most under-appreciated risk is that regulated stablecoins look risk-free until a stress event reveals they aren’t. The March 2023 SVB collapse briefly broke USDC’s peg (Circle held ~$3.3B in SVB) — the peg recovered within days when the FDIC backstop became visible, but the episode showed that “fully reserved” stablecoins still carry banking-system credit risk via the location of their reserves. A 2027 stress event that doesn’t resolve as cleanly would reshape the stablecoin landscape and accelerate CBDC adoption. Bring this scenario to Week-12 presentations if you cover the stablecoin angle (Bank for International Settlements 2023).
11.8 Conclusion of Lecture 11
- 11.1 Course objectives
- 11.2 Recap from Lecture 10
- 11.3 What’s a CBDC
- 11.4 The Digital Euro
- 11.5 e-CNY and small-country implementations
- 11.6 Programmable money
- 11.7 Stablecoins vs CBDCs
- 11.8 Conclusion of Lecture 11
Course at a glance (1/3)
Foundations of Digital Disruption in Financial Services
What is ‘emerging tech in finance’, how did we get here, where is it going
- Three waves of digital disruption in finance
- Today’s actors: incumbents, challengers, Big Tech, infrastructure
- Regulatory backdrop: PSD2, MiCA, EU AI Act
- Why now: structural drivers
- What this course will cover
Flipped — Digital Disruption in Financial Services
Group presentations · token allocation · discussion
- Recap of the foundations lecture
- Group presentations on digital disruption
- Token allocation & next steps
Agentic AI & LLMs in Finance
From LLMs to agents · applications · failure modes · EU AI Act
- LLMs in finance: architecture, training, capabilities
- Agentic AI: from answers to actions
- Applications: RAG, robo-advisors, AML, trading agents
- Failure modes: hallucination, drift, prompt injection
- Governance: EU AI Act and high-risk obligations
Flipped — Agentic AI & LLMs in Finance
Group presentations · token allocation · discussion
- Recap of the agentic AI lecture
- Group presentations on real LLM and agent deployments
- Token allocation & next steps
Blockchain, Crypto, DeFi & Tokenisation
From distributed ledgers to MiCA-regulated markets
- Blockchain primer: ledgers, consensus, smart contracts
- Crypto markets: BTC, ETH, stablecoins
- DeFi primitives: AMMs, lending, derivatives
- Tokenisation of real-world assets
- MiCA framework and EU enforcement
Course at a glance (2/3)
Flipped — Blockchain, Crypto, DeFi & Tokenisation
Group presentations · token allocation · discussion
- Recap of the blockchain & DeFi lecture
- Group presentations on real protocols and deployments
- Token allocation & next steps
Fintech Business Models
Neobanks, embedded finance, BNPL, Open Banking, Big Tech in finance
- Neobanks: N26, Revolut, Monzo, Chime
- Embedded finance & BaaS
- BNPL: Klarna, Affirm, regulatory pushback
- Open Banking & PSD2 outcomes
- Big Tech in finance
Flipped — Fintech Business Models
Neobanks, embedded finance, BNPL · group presentations · token allocation
- Recap of the fintech business-models lecture
- Group presentations on real companies and unit economics
- Token allocation & next steps
RegTech, Cybersecurity & Privacy-Preserving Compute
Industrialising compliance · cyber-threat landscape · ZKPs, MPC, federated learning · post-quantum
- RegTech overview: industrialising compliance
- KYC/AML automation in production
- Cybersecurity threats in finance
- Privacy-preserving compute: ZKPs, MPC, federated learning
- Post-quantum cryptography & the migration
Flipped — RegTech, Cybersecurity & Privacy-Preserving Compute
Group presentations · token allocation · discussion
- Recap of the RegTech & security lecture
- Group presentations on vendors, incidents, and emerging tech
- Token allocation & next steps
Course at a glance (3/3)
CBDCs & the Future of Money
Wholesale vs retail design · Digital Euro · e-CNY · programmable money
- What’s a CBDC: wholesale vs retail
- The Digital Euro state of play
- China’s e-CNY and small-country implementations
- Programmable money: feature, threat, or both
- Stablecoins as private money: tension with CBDCs
Flipped — CBDCs & the Future of Money
Final session · group presentations · token allocation · course wrap-up
- Recap of the CBDCs lecture
- Group presentations on real CBDC projects
- Token allocation, final standings, and course retrospective
Further reading
- Brunnermeier, James, and Landau (2019) — The Digitalization of Money, NBER WP — the framing piece.
- Auer and Böhme (2020) — BIS Quarterly on retail-CBDC design taxonomy.
- Bank for International Settlements (2023) — Project Tourbillon: privacy, security, and scalability for CBDCs.
- European Central Bank (2023) — ECB Digital Euro stocktake on the investigation phase.
- Jack and Suri (2014) — Jack & Suri’s AER paper on M-Pesa — the lasting reference for retail digital money.
Prepare before final flipped session (Week 12)
- Pick your Week-12 angle from the presentation series brief.
- Bring numbers — uptake, transaction volume, design specifics, public ECB / PBoC / BIS statements.
- Take a defended position — Week 12 rewards groups that defend a thesis honestly rather than survey neutrally.
- Upload slide PDF to Moodle before 14:00 next Thursday.
- Course-feedback survey opens after Week 12 on Moodle — your honest input shapes next year’s course.
See you next time
- Final session: Lecture 12 — Flipped: CBDCs & the Future of Money on 21 January 2027.
- Each group presents one final time.
- Slides due on Moodle before 14:00.
- After Week 12: final-grade publication within 2 weeks (after the end-of-term token-allocation audit); course-feedback survey.