The head of distributed ledger technology for Credit Suisse believes that digital currencies backed by central banks (CBDCs) are the future of payments.
Representatives from international banks and crypto projects Bitstamp and Fireblocks debated the future of electronic payments at the Digital Asset Summit – a crypto conference held in London today.
“There’s a value transfer gap in the market,” said Previn Singh, Head of the Distributed Ledger Technology at Credit Suisse. “For us it would be really impactful if we had instant delivery for payments.”
When asked whether CBDCs or stablecoins – digital currencies tethered to the value of a real world asset – would be the future of retail payments Singh said “I think it will always be a space for CBDCs”.
“Essentially the buck stop with a central bank,” he explained, referencing the security offered by a digital asset backed by central bank reserves.
“However, stablecoins are going to be a really valuable component,” he added, predicting a ‘two tier’ system would emerge dominated by CBDCs.
Andrew Turner of FIS, a company which works with banks to develop CBDCs, echoed Singh’s comments and said that central bank backed digital currencies will be at the centre of the “new ecosystem we are moving to”.
“In the next five years we will see the first large iterations of CBDCs,” Turner added, explaining that central banks were worried about the threat posed by cryptocurrencies which offer users ultra-fast, low cost payments.
Contrastingly, Julian Sawyer, predicted that stablecoins would be the future of the digital payments space.
“The adoption pivot is going to be when you can absolutely have categorical assurance around the value of your stablecoins,” he said.
Swayer said that his major concerns with CBDCs is that G7 governments may band together to create an electronic currency to facilitate trade and exclude developing nations: “I think there is a real danger that we have a friendly group of countries, lets call it the G7 group, and all the other developing countries aren’t included because they aren’t part of that circle of trust.”