The spotlight chat opens with Lucien explaining to Regulatory Ramblings host Ajay Shamdasani why central banks should look beyond narrow monetary policy considerations when deciding whether to issue a central bank digital currency (CBDC). The discussion is grounded in Lucien’s recent article, co-authored with UNSW Scientia Professor Ross Buckley, titled “The Need to Address the Broader Social Dimensions in Any Decision to Issue a Retail Central Bank Digital Currency,” published in Volume 48(3) of the UNSW Law See more +
As outlined in the article’s abstract, central banks typically assess the “need” for a CBDC through the lens of their primary mandates, which are traditionally focused on monetary policy and financial stability. While central banks see themselves as serving society, this mandate-bound approach risks overlooking broader societal needs and consequences that fall outside their conventional scope. Lucien and Ross argue that these broader social effects should be given substantial weight and that decisions regarding a retail CBDC should involve collaboration between states, central banks, and diverse sources of expertise, along with meaningful public engagement. Importantly, they stress that a CBDC may not always be the appropriate solution.
Lucien explains why he and Ross felt compelled to write the article, what it contributes to the expanding CBDC literature, and why evaluating CBDC issuance primarily through a monetary policy framework is problematic. They emphasize that CBDC issuance can have society-wide implications and therefore should not be driven solely by central banks acting within their traditional mandates.
To illustrate their point, the authors cite the Bank of Finland’s Avant Smart Card—often described as the world’s first CBDC, despite not using distributed ledger or blockchain technology—as a cautionary example underscoring the importance of clarity around the specific objectives for issuing a retail CBDC.
Lucien also carefully distinguishes between wholesale and retail CBDCs. He explains that wholesale CBDCs may offer meaningful efficiency gains in areas such as cross-border payments and capital market transactions and are accessible only to a limited group of market participants, such as commercial banks. By contrast, retail CBDCs are designed for use by the general public for everyday transactions, transfers, and payments. The article focuses squarely on retail CBDCs and the distinct policy questions they raise.
The conversation concludes with Lucien outlining the policy positions he and Ross advocate, reiterating that decisions about whether a retail CBDC is truly needed should involve multiple government agencies and broad public participation, rather than being driven exclusively by central banks.
The episode then shifts to a discussion with Dirk and Marian about their recent article, “Towards an EU Impact Investing Framework,” co-authored with Ross and Professor Douglas Arner of the University of Hong Kong’s Faculty of Law and the podcast’s team leader.
Their article examines the regulatory challenges facing impact investing in the EU. As the abstract notes, sustainability-oriented investors want to pay for measurable impact rather than mere regulatory compliance. The authors argue that the current EU Sustainable Finance Framework (EUSFF) overemphasizes rule-based, ex ante definitions of sustainability, which focus on inputs rather than demonstrated outcomes. While this approach may raise capital costs for unsustainable firms within the EU, it has not delivered meaningful global environmental or social improvements and may even encourage capital to flow into less regulated markets, worsening outcomes overall.
Dirk and Marian advocate shifting EU financial regulation toward proven, ex post impact rather than adding new product categories. They propose five targeted reforms aimed at simplifying regulation, reducing reporting burdens, and mitigating “impact washing,” while aligning with developments in the UK and Switzerland.
In closing, Dirk and Marian share insights on the timing of their article, its intended audience, and the policy outcomes they hope to influence. Dirk also notes the heavy reporting burdens faced by EU companies and observes that it was particularly striking that an EU draft proposal was released just ten days after their article was published. See less –