CreditSuisse Chairman of the Board of Directors Axel P. Lehmann has told a World Economic Forum (WEF) panel organized in Davos, Switzerland, that up to 87 percent of central banks around the world are looking into introducing central bank digital currencies (CBDCs), and shared that he thinks this is an excellent development.
These so-called stable digital currencies are supposed to represent alternatives and ultimately replace cryptocurrencies, including the decentralized kind that has the potential to replace – central banks themselves, by virtue of not needing a centralized issuing or regulatory authority.
And decentralized cryptocurrencies are used and promoted as money with “real” value unlike the fiat kind – yet CBDCs are based on the value of a country’s fiat currency.
In a clip, Lehmann talks about the benefits of CBDCs, though the list is not long: he mentions that this type of currency would allow citizens to open accounts with a central bank, instead of just with a commercial bank, which would be “safe,” and, “feel good.”
The feelgood factor aside, Lehmann speaks about the “retail central bank digital currency” as an interesting proposition not because of its digital nature, but precisely because it would change the underlying business model by allowing individuals to have accounts with central banks.
Lehmann does see “some challenges” with such schemes, mentioning that central banks act as public offices while the commercial variety does not and that questions such as interest rates and “bank run” situations remain to be “figured out.”
Other big bankers gathered at their “hallowed ground” in Davos also discussed this topic, or rather, how to make CBDCs successful, considering there’s a great deal of caution around the issue, although Lehmann’s figure of close to 90 percent of central banks worldwide considering the introduction of this form of currency seems accurate, judging by research that has emerged over the past year or so.
The Thai National Bank Governor Sethaput Suthiwartnarueput told the WEF panel that CBDC cross-border transactions are much faster, and cheaper than the type currently used, but took issue with the blockchain technology itself.
Blockchain can produce “unintended consequences,” Suthiwartnarueput went on – because anonymity “affects scalability.”