“Economies like Singapore’s and others that are highly dependent on financial services, they’ve been out early experimenting with Central Bank digital currency, as a way of finance modernizing their financial systems.”
Moving on, the third reason is financial inclusion.
“When you go from an account-based system to a token-based system, you can bring much more people into the financial system,” he opined.
According to the ex-CFTC exec, stablecoins might come into play here too.
“I believe central banks are looking at CBDC (because of) the incredible rise of stablecoins. The emergence of stablecoins as an international Payment and Settlement mechanism over the just over the last 18 months, has got central canks in what I call a fight or flight moment.”
Finally, another reason is the prospective launch of the Digital Dollar Project.
“At the end of the day the nations that have successfully encode their norms and values into digital money are going to be the winners in this.”
The pilots will explore, analyze and identify technical and functional requirements. Also, they will assess benefits and outstanding challenges, test applications and approaches, and consider potential use cases for both retail and wholesale commercial utilization.
Recently, Facebook announced the Novi pilot project, in association with Paxos and Coinbase. Facebook hoped to address some of the challenges posed by current international payment systems with Novi. As discussed above, regulators raised red flags over these private coin developments. Something that might overshadow their success. This was no different.
Democratic senators in a letter urged it to discontinue Novi and Diem projects. The list of Democratic Senators included Brian Schatz, Sherrod Brown, Richard Blumenthal, Tina Smith, and Elizabeth Warren.
Reason? Well, Facebook is “pursuing digital currency plans on an aggressive timeline.” This, even though “these plans are incompatible with the actual financial regulatory landscape.”
Not surprisingly, the team at Diem quickly responded to counter those allegations.