Roxe CEO: All central banks are developing CBDC, but what kind of CBDC does the world need?
Original source: Cryptoslate
Original source: Cryptoslate
Author: Roxe payment network CEO Haohan
The COVID-19 pandemic has driven the development of cashless payments. Central banks around the world are racing to develop and test digital currencies. According to the survey data released by the Bank for International Settlements, 80% of the 66 central banks in the world said they were researching digital currency technology, and about 20% of the central banks said they might issue digital currency in the next six years.
Many emerging market countries expect to solve inclusive finance and improve payment efficiency through the development of CBDC. Some developed countries develop CBDC in order to improve the efficiency of inter-bank payment, enhance security, provide a faster and more transparent transaction settlement experience, and promote better development of the capital market.
Most central banks are designing and developing their own CBDC based on their own needs, but what kind of CBDC does the world need?
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Perspective of retail payment
The global payment market has experienced three evolutions so far, and is now in a state of three generations coexisting. The first generation of payment is cash payment, the second generation is bank card and bank account payment, the third generation is mobile payment, and the current emerging fourth generation is peer-to-peer payment based on blockchain technology.
At present, there are still 1.7 billion adults in the world who do not have bank accounts, and they are still in the first generation. In the European and American markets, the second generation of bank card payment has achieved large-scale popularization, while China and some emerging markets have made great progress in the third generation.
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Wholesale Payment Perspective
Since each fiat currency has its own unique clearing system, international payments can only be made in multiple steps through correspondent banks located in different countries. For example, the US dollar cross-border payment settlement system adopts CHIPS, the euro adopts EURO1, the Japanese yen adopts FXYCS, and the renminbi (RMB) adopts CIPS. Cross-border payment involves many participants, time zones, jurisdictions and regulations, etc., which is inefficient, opaque and costly. As a result, most international payments currently still take 3 to 5 days to clear and settle.
Today's global financial system is a consortium of regional financial systems, each including central banks, banks, currencies, technology systems, financial institutions, and regulators. It is a highly fragmented and haphazardly pieced together structure, like an ancient castle built over generations. In the wholesale payments space, no single global payments network can effectively unify all ecosystem components.
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Blockchain technology is solving payment problems
Blockchain technology transforms payment from an account-based model to a digital token model, enabling peer-to-peer real-time payments. At the same time, the blockchain can also rapidly accelerate the digitization of currencies, make it possible to reconstruct and connect the global payment system, help reduce costs and conduct transactions at an unprecedented speed.
In theory, the CBDCs currently being developed and tested by various countries can indeed accelerate the development of a cashless society and improve the efficiency of retail payments in their respective countries.
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Global Co-Governance Network
If the central banks of various countries cooperate to build CBDCs based on common governance chains and networks, and each act as a super node, while protecting users and data privacy, interoperability between CBDCs can be achieved, and low-cost, Instant cross-border and cross-currency payments, thus greatly improving the efficiency of retail and international wholesale payments in various countries. Driven by CBDC, an interoperable and truly globally unified payment network will be formed.
Blockchain technology provides us with the most feasible opportunity, which requires the central banks of various countries to abandon silos and work together to establish a CBDC based on common governance infrastructure, unify the global payment system, and benefit human society.
【about the author】
Roxe payment network CEO Haohan graduated from Columbia University and has in-depth research on the blockchain and encrypted digital asset industry. He led the Roxe core team built by SWIFT, DTCC, Microsoft, Google, Ripple, Moneygram, IBM, Bank of America Merrill Lynch , the US Financial Industry Regulatory Authority (FINRA), Deloitte and other top technology and financial institutions executives and compliance experts.
