The Banking Executive Magazine - October Issue 2022

artwork or some other digital or real property. Virtual Asset Service Provider (VASP): A business that provides any of the following services: transferring or ex- changing between virtual assets and fiat currencies, or between different virtual assets; safekeeping/adminis- tration of virtual assets; and provid- ing financial services related to virtual asset issuance. Virtual currency wallet: A mean for holding, storing, and transferring virtual assets. Smart contracts: Are automatically executed contracts following predetermined process in the blockchain network. Decentralised Finance (DeFi): Indicates financial services imple- mented without centralized interme- diaries. Stablecoin: A type of crypto-asset designed to maintain a stable value relative to a specified asset or a pool of assets. Depending on the type of their collateral backing as well as their price stabilization mechanisms, stablecoins can be classified into cash-based, asset-based, crypto- asset-based, and noncollateralized (algorithmic) stablecoins. Distributed Ledger Technology (DLT): DLT is a database that is stored, shared, and synchronized on a com- puter network. Data is updated by following rules for achieving consen- sus among the network participants. allows for data to be stored at multi- ple locations (“decentralized”) on a shared network allowing participants to track the ownership and transfer of virtual assets. Crypto assets: Is a digital representation of value, made possible by advances in cryp- tography and distributed ledger tech- nology. Global Stablecoins (GSCs): Addressing the regulatory, supervi- sory and oversight requirements of Digital Money Across Borders, GSCs are built on an existing large and/or cross-border customer base, which have the potential to scale rapidly to achieve a global or other substantial footprint. GSB is also defined by G20 as stablecoins with the potential for mass adoption. Blockchain: Is a distributed database or ledger that is shared among the nodes of a computer network. As a database, a blockchain stores information electronically in digital format. Blockchains are best known for their crucial role in cryptocurrency sys- tems, such as Bitcoin, for maintain- ing a secure and decentralized record of transactions. The innova- tion with a blockchain is that it guar- antees the fidelity and security of a record of data and generates trust without the need for a trusted third party. One key difference between a typical database and a blockchain is how the data is structured. A data- base usually structures its data into tables, whereas a blockchain, as its name implies, structures its data into chunks (blocks) that are strung to- gether. Central Bank Digital Currency (CBDC): Is a digital liability of a central bank that is widely available to the public. Like existing forms of money, a CBDC would enable the public to make digital payments. A CBDC would be the safest digital asset available to the general public, with no associated credit or liquidity risk. the BANKING EXECUTIVE 12 ISSUE 166 OCTOBER 2022