WEF 2022: Banks see the need for caution and speed on central bank digital currencies
Despite the panel's concerns about the problems of CBDC implementation, they acknowledged that an efficient design was essential for success
By Shashank Bhardwaj
Image: Fabrice Coffrini/ AFP
Experts from around the world convened in Davos, Switzerland, on Monday, May 23, at the World Economic Forum to discuss the process of implementing a central bank digital currency (CBDC).
The World Economic Forum Annual Meeting 2022 occurs at a critical geopolitical and geoeconomic juncture in the last three decades. The summit, which began on May 22 and will end on May 26, is expected to attract over 2,000 leaders and experts from around the world.
“Central Bank Digital Currencies are becoming more and more interesting for governments as effective ways of managing the digital economy. Most central banks have not begun implementation of the currency as concerns remain. An important success factor for the future of a CBDC regime is cooperation between the public and private sector. Participation of the private sector in developing, testing and deploying a CBDC will have several benefits and will become more important as CBDCs could play a huge role in the future of financial systems,” WEF noted.
Although several central banks are exploring a CBDC, according to Bank of Thailand governor Sethaput Suthiwartnarueput, there is little practical experience with them. He used the current Russian sanctions as an example of a potential CBDC design challenge. Axel Lehmann, chairman of Credit Suisse, also emphasized the rapid advancement of non-blockchain fast payment technology and posed serious questions for domestic retail CBDCs, such as whether accounts with central banks will pay interest.
"We feel a little behind the curve" in the introduction of retail CBDCs, said IMF managing director Kristalina Georgieva, while Bank of France governor François Villeroy de Galhau concurred, saying a "CBDC is not the monopoly on progress," and central banks should not waste time in implementing it.
Suthiwartnarueput and Villeroy de Galhau both agreed that cross-border wholesale CBDC settlements might be possible in the next five years. The panel concluded that proper design is essential for a successful CBDC and that wholesale CBDC introduction presents fewer obstacles.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash