By: 4 June 2024

According to reporter Robert Welbourn, the experts dived right in

CBDCs at Money20/20

The FinTech Intel team are on the ground in Amsterdam and taking in day one of Money20/20. 

On The Summit & Bar stage, the topic of the day has been CBDCs. There have been a number of panels and fireside chats with experts from across the globe. Our reporter Robert Welbourn sat in on some of them. 

The future of money: CBDCs or stablecoins

This was a panel discussion chaired by Anil Hansjee, who’s a general partner at Fabric Ventures. Alongside him were Dr Alisa Dicaprio, chief economist at R3 and advisor on the Blockchain Business Council, Siân Jones, chair at XReg Consulting, and Ran Goldi, senior vice president, payments and network, at Fireblock. 

One of the key focuses of the discussion was around cross border payments, and how digital currencies can help smooth this process. Dicaprio spoke about how stablecoins are improving the process even as we speak; due to their being created and distributed by private companies, those companies often have bases in multiple countries, and so can send money around the world with little friction. 

This is opposed to CBDCs, which originate from a central bank in a single country, and thus must be transferred to other authorities in other countries. CBDCs must be transmuted almost as they cross the border, moving from one form to another depending on how each central bank operates. 

Jones spoke about how regulators have cautious optimism around CBDCs and the benefits they’ll bring, which she named as improved payment efficiencies, financial inclusion, and the ability to better combat financial crime, amongst many others. 

Goldi spoke around how digital currencies are hugely affected by geopolitics, and turbulence in global affairs will – and even already is – affect the distribution and take up of them. 

Geopolitics, Goldi said, will affect the uniformity of money, which is one of the main aims of CBDCs. Which is also another place the stablecoins and CBDCs differ, said Dicaprio. She spoke about how $10 and €10 have essentially the same buying power, but CBDCs won’t have this. 

Hansjee spoke on how stablecoins are reflective of wider geopolitics, before Goldi spoke about the second stablecoin war, which we’re currently in the middle of. Large corporations have begun to take notice, and this has led to a kind of stablecoin arms race; often the most successful companies are the first to market. 

Dicaprio then talked about how this has drawn the attention of large banks, whose interest has been piqued by the stablecoin war, and now they suddenly want to become involved. 

Integrated futures: CBDCs and tradfi in the next decade 

The other panel that really caught my interest was this one, which was a fireside chat between Rachel Morrissey of Money20/20 and Humphrey Valenbreder, chief executive officer at Partior. 

He spoke about the biggest gap between CBDCs and traditional finance (tradfi) as he saw it: low adoption rates. He said that there needs to be a critical mass of tradfi companies adopting digital currencies, in order to reach a tipping point which would see digital currencies enter the mainstream, but this hasn’t happened yet. 

Valenbreder said one of the main reasons for this is that developed economies are not as advanced as private companies, and for various reasons-using public money and regulatory oversight amongst others-they can’t move as fast as private companies. 

He echoed the prior panel, stating that often the leading companies are the ones that are first to market; private digital currency companies have been in existence for years now, and CBDCs are slowly crawling along behind them. 

He also said that, before CBDCs can become truly mainstream, the end-to-end process, indeed across borders, must be working properly. It’s no good if one country has incredibly advanced CBDC technology, and is properly utilising the blockchain, but they’re dealing with other countries that aren’t. For the process to work, every country needs to be operating at the same speed. 

Valenbreder went on to say that one of the biggest advantages digital currencies will have, once they become universally adopted, is that they’ll allow for the vast amounts of capital trapped in the global financial system to be unlocked. Due to the slow speed of cross-border payments, money sits in holding accounts; it must be set aside until all proper checks and processes are complete and the money can be released. 

Digital currencies won’t have this issue. The amount of money they’ll release will be staggering. It’ll democratise money, Valenbreder said, and will allow for more equality in banking and finance. It’ll also allow for more globalisation; digital currencies will cut out a lot of the middlemen and put purchasers and merchants much closer together. 

The chat closed with Morrissey asking Valenbreder for the one piece of advice he’d give banks and regulators when it comes to digital currencies, and his answer was simple but stark: 

“Stop talking about it and just do it!” 

Robert Welbourn
Robert Welbourn is an experienced financial writer. He has worked for a number of high street banks and trading platforms. He's also a published author and freelance writer and editor.