When Bitcoin first surged past $1,000 in 2013, the milestone felt almost unreal. Inside the Federal Reserve, it was treated more as a passing curiosity than a genuine threat. Yet for Rod Garratt, then an economist at the New York Fed, the moment carried deeper significance. It signaled the arrival of digital money as more than a niche experiment — raising a question that would guide the next decade of his research: what happens when the concept of money is no longer bound by paper, bank accounts, or national borders?
Project Jasper and the First CBDC Experiments
At the Bank of Canada, Garrett helped launch Project Jasper, one of the first proofs of concept for wholesale CBDCs. The project tested whether distributed ledger technology could support interbank payments more efficiently than existing systems. The key innovation was a “depository receipt” model—tokens backed by central bank reserves that circulated during the day and were extinguished at night. It was a cautious way to explore blockchain’s potential without upending the legal framework of money.
The “Money Flower” and a Shared Language
By 2017, Garratt and BIS colleagues were grappling with a flood of new terminology and speculation. Their response was the now-famous “money flower,” a diagram mapping different forms of money—cash, deposits, cryptocurrencies, and CBDCs—against four characteristics: central bank issuance, electronic form, peer-to-peer transfer, and universal accessibility. It was not advocacy but taxonomy, yet it gave central banks and scholars a language for what had been a confusing blur.
Libra Forces the Issue
Then came Libra. Facebook’s 2019 proposal for a global digital currency electrified policymakers. Suddenly, the prospect of a privately issued, borderless money forced central banks to consider whether they too must offer digital cash to the public. The conversation turned from interbank plumbing to political sovereignty. For the European Central Bank, the digital euro became a project not only about innovation but about independence from U.S.-dominated payment networks.
Politics and the Retail CBDC Backlash
Enthusiasm for retail CBDCs quickly collided with fears of state control. In Canada, the freezing of protestors’ bank accounts during the COVID-era trucker convoys shook public trust. In the U.S., debate polarized into extremes: from proposals for “FedAccounts for all” to alarm over a “CBDC Surveillance Act.” What began as an economic design exercise turned into a referendum on government power.
Wholesale Innovation Continues
If retail CBDCs became politically fraught, the wholesale side pressed on. Central banks and commercial banks now test tokenized deposits, programmable corporate payments, and cross-border settlement through BIS’s Project Agorá. The logic is simple: if banks tokenize their liabilities, central banks should provide a tokenized settlement asset to preserve the singleness of money.
Stablecoins as Digital Checks
Garratt sees parallel momentum in stablecoins, but reframes them. Strip away the hype, he argues, and a stablecoin is essentially a digital check: a negotiable instrument, a payment instruction. The question is not whether they will replace money, but whether they can become a boring, reliable rail for moving it. For banks, issuing their own stablecoins could one day be as routine as writing deposits into accounts—just faster, programmable, and potentially global.
A Messy but Pragmatic Future
From Bitcoin’s outsider experiment to central banks’ cautious pilots, digital money has traveled a long road in just a decade. For Garratt, the future is not a single model but a spectrum: push payments through tokenized deposits, pull payments via stablecoins, and a coexistence of public and private rails.
“Payments are the plumbing of finance,” he likes to say. When they work, nobody notices. When they fail, it becomes everyone’s problem. The challenge for central banks and innovators alike is to make sure the next generation of money is both invisible and indispensable.
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