R3 Research Director, Anthony Lewis predicts that a form of central bank digital currency (CBDC) could go live in 2018.
According to Anthony Lewis, research director at global banking consortium and distributed ledger software startup R3, a form of central bank issued digital currency (CBDC) may go live in 2018. While speaking at the Deconomy conference this week at the Walkerhill Hotel in South Korea, Lewis stated that blockchain technology will be used by select financial institutions.
Lewis said, “For wholesale use (of CBDC), I think we are looking at this year. We have had conversations with central banks who have mandates to fix certain payment problems, and one solution they look to is a blockchain type of platform,” reported Korea Coin.
While discussing the topic “Industry Evolution Through Distributed Ledger,” other panelists also shared a similar opinion that CBDC will be launched for select financial institutions.
However, Lewis clarified that unlike bitcoin or Ether, the launch of CBDC will not present consumers a new payment choice and that in the beginning, only select financial institutions would use such a cryptocurrency.
He avers, “Don’t make your secondary (decentralized) system look like your primary (centralized) system. Otherwise, if a primary system goes down in an attack, then all the attackers need to do is just to play the same trick. Then it’s not resilient, it’s just another IP address to attack.” Thus, Lewis believes that such a system would possibly be used in particular situations, like in case of disaster recovery.
Other panelists also echoed their views as well as concern. Stanley Yong, global CBDC lead at IBM and a former CBDC researcher at Singapore’s central bank, who was also a panelist expressed optimism regarding the application of blockchain system to commercial banking, however, he was doubtful about its application to consumers.
Yong stated, “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.”
The panel of experts believes that the current banking technology will get replaced by blockchains tech in future. In fact, Yong asserted that such systems are “due for retirement.”
On the other hand, in past, the Bank of International Settlements argued that a CBDC may lead to “higher instability of commercial bank deposit funding.”
While citing the example of the Bank of England, panelist Ian Grigg, a financial cryptographer, said central banks support the deposit of commercial banks. If it issues a cryptocurrency to the public, it could weaken the present commercial banks’ deposit base, and eventually, the loan market will bear the brunt.
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