Central Bank Digital Currency to go live in 2018

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In 2018 Digital currency of Central Bank, CBDC to go live in 2018

CBDC, a form of central bank digital currency might go live in 2018.

This was stated by Antony Lewis, research director at global banking consortium and distributed ledger software startup R3, who predicted this on Wednesday during the panel discussion at the Deconomy event in Seoul, South Korea.

According to Lewis:

“For wholesale use (of CBDC), I think we are looking at this year. We have had conversations with central banks who have orders to fix certain payment problems, and one solution they look to is a blockchain type of platform.”

However, Lewis clarified that the start of this new currency would not function like Bitcoin or Ether do today. This cryptocurrency will be used by selected financial institutions to start with.

Hence, Lewis emphasized that such system is most likely to be used in certain specific situations, such as in cases of disaster recovery due to their current boundaries.

He explained:

“Don’t make your secondary (decentralized) system look like your primary (centralized) system. However, If a prime system goes down in an attack, then all the attackers need to do is just to play the same trick. Then it’s not resilience; it’s just another IP address to attack.”

The global CBDC lead at IBM and former researcher at Singapore’s central bank, Stanley Yong, indicated that a blockchain system would ultimately be best applied to commercial banking.

Yong said:

“If it issues cryptocurrency to millions and billions of citizens, it will have to hold all these individual accounts, which inherently increases the market and credit risks.” 

Ian Grigg, a financial cryptographer, taking a different angle, said it might not even be the primary role of central banks to issue a retail CBDC. Summoning the Bank of England as an example, Grigg described that the policy of the organization is to promote the deposit of commercial banks.

As such, directly issuing a cryptocurrency to the public could ruin the deposit base of subsisting commercial banks, which subsequently will affect the loan market, Grigg said.

The view repeated past comments from the Bank of International Settlements, which is an earlier report stated that a CBDC could give rise to “higher vulnerability of commercial bank deposit funding.”

Still, while projections diversified, there was an assurance that blockchains would substitute existing banking technology, with Yong going so far as to state such systems are “due for retirement.”

 

Nishanth Shetty

Nishanth Shetty is a technical writer, author and a crypto-advisor working at Cryptofame. Based in the city of dreams, Mumbai, on the west coast of India. He holds a bachelors degrees from Mangalore University. Nishanth has a myriad experience of technical writings for tech brands. His interests include technology, travel, and food.