Central Bank Digital Currencies (CBDCs) will play an essential role in the new, international financial system that blockchain technology is underpinning. CBDCs are a remarkable milestone for Central Banks as they facilitate the protraction of sovereign monetary policy in a digital economy- for the welfare of billions of people worldwide.
In Ripple’s recent webinar- Bridging the Gap in innovation– financial experts and professionals from Ripple’s University Blockchain Research Initiative (UBRI) and the National University of Singapore (NUS) discussed the future of CBDCs and their effect on cross-border payments.
It is evident that the future of the financial system is global. However, for a genuinely borderless infrastructure to function, interoperability is the key to long-term success. It should comprise linking to existing local schemes and global systems.
“If we consider the big, long-term picture of CBDC, currencies will be digital…this will allow for more efficient payment systems, greater financial inclusion, and increased utility with new, innovative services. Suppose a Central Bank doesn’t have a long-term holistic strategy for CBDCs. In that case, they risk the future prominence and relevance of their currency, both domestically and internationally,” explained Ripple’s Global Head of Client Solutions, Ross Edwards.
According to a recent BIS survey, Central Banks not astonishingly rated “improving the efficiency of payments” as a primary incentive for issuing CBDCs. For most businesses and individuals, both locally and globally, the potential to conduct cost-effective, real-time global payments is integral to their daily activities’ success.
“When it comes to digitizing global payments and making the process more efficient, blockchain could be a game-changer to emerging markets,” said BNY Mellon’s Managing Director, Head of Markets Strategy, Daniel Tenengauzer.
However, the adoption of CBDCs in cross-border payments and beyond relies on their usability by consumers and businesses. Innovation will bring utility, and consequently, adoption. Partnerships between public and private sectors will spur innovation.
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