Bankers see the need to be careful and quick when it comes to CBDCs

The process of launching a central bank digital currency (CBDC) is fraught with unknowns, some of which were outlined at a panel of experts meeting Monday at the World Economic Forum in Davos, Switzerland. The panel concluded that good design is key to the success of uba CBDC and that there are fewer challenges in launching a wholesale CBDC.

The Governor of the Bank of Thailand, Sethaput Suthiwartnarueput, called, Although many central banks are considering introducing a CBDC, there is little practical experience with it. The National Bank of Thailand launched proof-of-concept programs in 2018. your project mbridge It started as an experiment to set up a gateway for wholesale cross-border payments with the Hong Kong Monetary Authority and has expanded to include the Bank of China, the United Arab Emirates and the Bank for International Settlements. Cross-border transactions using traditional banking technology can take days to be reflected, while CBDC transactions are much faster.

Suthiwartnarueput said so The use of blockchain technology can have unforeseen consequences. It’s good for transparency, he said, but anonymity hurts scalability. There is a risk in designing a CBDC as smart contracts require each situation to be determined in advance. He cited the current sanctions against Russia as an example of a potential challenge for CBDC design. The Central Bank of Thailand is considering conducting a “limited pilot” of retail CBDC in the fourth quarter of this year.

Bankers see the need to be careful and quick when it comes to CBDCs
Bankers see the need to be careful and quick when it comes to CBDCs

international transactions between people, In particular, remittances from workers in other countries, representing a $48,000 million per year market, are one of the most pressing use cases for CBDCs. Suthiwartnarueput said CBDCs can make these transactions 50% cheaper and 68% faster than current money transfer technology. Currently, the average commission for such a transfer is 6.3% of the transaction amount.

The President of Credit Suisse, Axel Lehmann, he pointed to the rapid advancement of non-blockchain fast payment technologies and raised questions for domestic retail CBDCs, such as whether accounts with central banks would pay interest. Privacy and brokerage are other thorny issues for retail CBDCs. Executive Director of the International Monetary Fund, Kristalina Georgiev, said that “feels a little behind schedule” in creating retail CBDCs, and the governor of the Bank of France, Francois Villeroy de Galhau, agreed that “CBDC is not the monopoly of progress” and that central banks shouldn’t waste time adopting it.

Suthiwartnarueput and the French central banker agreed that CBDC cross-border wholesale settlements could become a reality within five years.

Clarification: The information and/or opinions expressed in this article do not necessarily reflect the views or editorial line of Cointelegraph. The information contained herein should not be construed as financial advice or investment recommendation. All investment and trading movements involve risk and it is the responsibility of each person to conduct their proper research before making any investment decision.

Similar Posts