This panel of CBDCs was moderated by Erwin Voloder, Senior Policy Fellow at European Blockchain Association. Panelists include James Wallis, VP of Ripple, Nadia Filali, Head of Blockchain Programs at Caisse des Dépôts, and Laurent Marochini, Head of Innovation at Société Générale.
Along with stablecoins and native cryptocurrencies, Central Bank Digital Currencies (CBDCs) are one of the three key pillars of the digital money landscape. With CBDCs, the efficiency and speed of settlement can be improved, reducing settlement times from T+2 to T+0 or even T+15-minutes. The adoption of CBDCs facilitates cross-border payments and also plays an important role from the risk management perspective.
When these three currencies co-exist in the future, what will happen? Will CBDCs be adopted in both wholesale and retail? What are the challenges lying ahead? Read on to find out!
Intermediaries Will Continue to Be Relevant in the Future
All panelists agree that intermediaries will continue to exist in capital markets, although the degree of their importance may vary depending on the country’s specific circumstances. The primary reason is that not all segments of the population can swiftly adopt emerging technologies, necessitating the presence of intermediaries for certain groups.
However, panelists indicate that different countries will establish different CBDCs to better meet their needs. James believes that in some emerging countries where central banks do not function properly and a significant portion of the population remains excluded from the existing financial system, there will be other actors, such as startups or fintech companies, that assume a more prominent role in catering to the retail sector.
Nadia further emphasizes that banks’ role extends beyond currency issuance, encompassing services such as loans, savings, and a diverse array of products. In her opinion, intermediaries will still exist, but the products and business models might undergo changes.
Laurent concludes that at the end of the day, the regulations and the conceptions of CBDCs will provide greater clarity regarding the role banks can play in the future capital market.
More EBC insights on CBDCs and regulations:
- The Potential of Stablecoins and the Impact of MiCA Regulation
- Navigating Uncertainty: MiCA and the Challenges of Regulating Crypto
Collaboration Is Key to the Interoperability of CBDCs
James points out that there are three types of interoperability: interoperation with existing payment schemes, technical interoperability between protocols, and cross-border interoperability for seamless transactions across different countries’ CBDC systems.
He stresses the importance of identifying the specific goals to be achieved, as different methods, whether from a business or technical standpoint, will be required to attain different elements of interoperability. Nadia thinks that defining responsibilities and establishing bridges between networks will also be vital.
All panelists unanimously agree that collaboration is crucial for addressing these topics effectively. Standardization is indispensable and there needs to be a willingness from different jurisdictions to enhance trade and business relations with one another.
Laurent and James also point out that there have been CBDC developments and research worldwide. They emphasize the need for cooperation among actors, particularly in Europe, to avoid being surpassed by different countries across the world. Working with each other is the only way to achieve the goal!