John Kiff, Senior Financial Sector Expert, International Monetary Fund (IMF); Jason Chlipala, COO, Stellar Development Foundation; Carmelle Cadet Founder & CEO, Emtech during Meridian 2020 discussed CBDCs and Stablecoins.
Jason Chlipala stated that they will be talking about two very hot topics in the world of digital assets like CBCS and Stable coins.
For clarity, CBDCs are Central Bank Issued Digital Currencies. CBDCs are inspired directly by Bitcoin; however, CBDCs are lot different from virtual currency and cryptocurrency, which are not issued by the state. CBDCs as they are backed by the state might gain legal tender status if declared by the government.
CBDCs are envisioned to become the new kind of Central Bank Money. They are also known as digital fiat currencies or digital base money. It is expected that when CDBCs are issued, they might not use DLT or blockchain technology. At present, CBDCs are in the hypothetical stage with some proof of concept programs.
Reportedly, in the past couple of years, stable coins have just exploded. The total supply of stable coins is now over 22 billion dollars. And, for example, Tether now has more 24 hour volume than Bitcoin transactional volume and Bitcoin and Ethereum combined.
Stables coins in a way per Jason Chlipala are feeling like killer apps on blockchain. And, then there are also CBDCs increasingly in the public eye and increasingly on the minds of regulators and governments. The Bank of International Settlements released a survey showing that about 80% of Central Banks are engaged in some sort of work on CBDCs.
So, these are incredibly important topics or ideas in the industry. John Kiff and Carmelle Cadet expressed their views on how both of these could co-exist. Those who are interested to know more should check in to the YouTube Video titled: The Odd Couple. CBDCs & Stablecoins – John Kiff, Carmelle Cadet (Meridian 2020 Day 1).
The discussion clarifies on the different colors of CBDCs and on how it is not just one thing. There is a landscape intro of who is doing what in this regard. There is a decent introduction about retail CBDCs, synthetic CBDCs, electronic b-money and centralized e-money, asset backed stablecoins like USDC, payment crypto assets like BTC and lot of other stuff. The money matrix as an alternative to BIS flow is worth the watch. The motivations for issuing CBDC in emerging market and developing economies and advanced economies and more about improving monetary policy effectiveness are discussed.
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