Can CBDCs and Stablecoins Coexist? Experts Weigh In

Introduction

At the recent Future Innovation Summit event in Dubai, a panel of experts discussed the possibility of central bank digital currencies (CBDCs) and stablecoins coexisting. The panel explored the potential benefits and risks of these digital currencies and how they could shape the future of cross-border payments.

The Argument for CBDCs

Eetu Kuneinen, co-founder of the gold-backed stablecoin project DGC, argued that CBDCs would provide a centralized solution as they would be issued and controlled by governments. However, he raised concerns about the potential dangers of government control, such as freezing assets of political rivals or succumbing to pressure from larger countries.

A Framework for Stablecoins

Kuneinen proposed an alternative framework where stablecoins are not controlled by a single private company. Instead, he suggested a system where multiple banks can issue the same stablecoin, regulated by a set of rules and guidelines.

A Step Towards Decentralization

Nikita Sachdev, founder of Luna Media Corp, offered a different perspective. While acknowledging the potential risks associated with stablecoins, Sachdev argued that governments exploring the use of blockchain for CBDCs could be a step towards progress. She believes that this exploration may eventually lead to fully decentralized and Web3-compatible digital currencies.

Risks and Learnings

Jorge Carrasco, the managing director of FTI Consulting, emphasized that the technology behind CBDCs and stablecoins is still in its early stages. He acknowledged that failures and lessons are to be expected as progress is made. Carrasco also expressed his belief that CBDCs and stablecoins could become interoperable in the future, with a transnational body ensuring the interests of the people.

The User's Choice

Jagadeshwaran Kothandapani, head for Middle East and Africa for Citibank, echoed the sentiments of the other panelists. He emphasized that companies and users should have the freedom to choose the digital currency solution that best addresses their specific pain points. Kothandapani believes that CBDCs and stablecoins can coexist as long as stablecoins maintain stability and decentralization.

Conclusion

The discussion at the Future Innovation Summit highlighted the ongoing debate surrounding the coexistence of CBDCs and stablecoins. While there are varying opinions on the matter, it is clear that both digital currency solutions have their advantages and challenges. As the technology continues to evolve, it will be interesting to see how CBDCs and stablecoins shape the future of cross-border payments.