Current monetary systems are set to see a significant shift in the coming years as technological advancements change how we transact. This was the focus of a panel discussion at the recent London Blockchain Conference, which included:
- Amarachi Amaechi (Co-founder & COO of Bitpowr Technologies Inc);
- Kaj Burchardi (Managing Director at Boston Consulting Group);
- Vincent Mele (Founder and Director at Otranto)
- Blake O’Donnell (Partner at Punter Southall Law)
- Simit Naik (Director of Strategy at nChain).
The panel discussed emerging trends, technological innovations, and regulatory dynamics shaping the next era of monetary systems. This included insights into the transformative forces at play, from digital currencies to decentralised finance, and being at the forefront of understanding the financial evolution that lies ahead.
Central Bank Digital Currencies and government blockchains
The discussion began with a focus on CBDCs, stablecoins, and the various applications of digital ledger and blockchain technologies.
Burchardi highlighted a recurring theme in the CBDC debate: digital currencies need to be carefully designed with user protection as a priority. This concern was recently echoed by Bundesbank President Joachim Nagel in a public address.
O’Donnell observed that central banks are worried about the potential disruption that CBDCs and other digital currencies could cause to the global financial system. While they are moving toward implementation, there is still a significant journey ahead. Naik suggested that CBDCs, digital currencies like Bitcoin, and other forms of currency can coexist, a point often overlooked in the broader debate.
Mele noted that Bitcoin and other digital currencies initially posed a challenge to central banks, prompting them to reassess their role in overseeing money as a public good.
Stablecoins as national currencies
O’Donnell said that stablecoins serve as a ‘wake-up call’ for the need to improve national currencies, or else risk losing ground to private alternatives. He also noted that policymakers are concerned about how private stablecoins, like Tether, might be used, for instance, by Russia to circumvent sanctions.
Burchardi pointed out that privately issued money is not a new concept, as it has been around for a long time. He believed the EU’s MiCA regulations effectively clarify roles and responsibilities while addressing key concerns.
Naik noted that the regulations and associated risks vary depending on the type of stablecoin. These include fiat-backed, asset-backed, crypto-backed, and algorithmic stablecoins, among others.
While risks will always be present, regulations aim to mitigate them and protect consumers. Burchardi also highlighted that the ability to send stablecoins globally with ease and minimal cost is revolutionary, offering a viable alternative to national currencies in some regions.
Naik built on this by explaining how stablecoins can significantly improve cross-border payments, making them faster and more efficient. The ability to move money quickly and effortlessly addresses a long-standing issue.
Mele viewed the situation from a geopolitical perspective, noting that some countries are opposed to any single nation having control over the global financial system. This isn’t specifically an anti-US stance, but rather a broader opposition to any one player holding such power.
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