At a recent Future Innovation Summit event held in Dubai, Cointelegraph moderated a panel titled “Stablecoins, Central Bank Digital Currencies and Cross-Border Payments” To explore if and how CBDCs and stablecoins could coexist.
The panel included Jorge Carrasco, Managing Director of FTI Consulting; Nikita Sachdev, Founder, Luna Media; Jagadeshwaran Kothandapani, President of Citibank, Middle East and Africa; and Eetu Kuneinen, co-founder of the gold-backed stablecoin project DGC.
The group explored various topics, answering whether stablecoins and central bank digital currencies could coexist. According to Kuninen, CBDCs will be “inherently centralized” as they will be issued by the government, although they may be built on the blockchain. The executive argued that some risks come with government control. It is to explain:
“Let’s say they don’t like some political rival. They can, with one click, freeze the other party’s assets. So what gives us any guarantee that they won’t use this? Or if they’re a smaller country, they’re being pressured by a larger country to do that?”
On the other hand, the executive said that creating a framework for a stablecoin that is not controlled by a single private company might be best. “We could have a framework that anyone with assets and anyone with access to certain technology can be able to issue. So, we could have multiple banks issuing the same stablecoin regulation,” he added.
Sachdev offered a different opinion on the topic. The executive said that if the government is really intent on freezing someone’s digital assets, it already has different ways to do so. Furthermore, Sachdev argued that the government’s exploration of using blockchain in CBDCs could be a step towards progress that could eventually lead to a shift to full decentralization and full Web3.
While the executive appears to be advocating for CBDCs, it has made it clear that it does not endorse CBDCs or stablecoins just yet, with recent events such as the collapse of Terra USD (UST) highlighting how stablecoins could also form a set of Its own risks to the world. .
Related: Singapore’s central bank says three business days is a “just-in-time transfer” for stablecoins
Because the technology is at a very early stage, it’s inevitable to see problems along the way, Carrasco added. “I think it’s very normal to see failures and to see lessons learned as we move forward,” he explained. The executive also believes that central bank digital currencies and stablecoins may become interoperable in the future. He said:
“I think they will coexist. And maybe in some years, we will see a transnational body that takes care of central bank digital currencies and their interoperability and ensures that no government stops them or does something that affects people’s interests.”
Meanwhile, Kothandapani echoed the sentiments expressed by other panelists and added that it will always be companies or users who decide which solution is right for them.
According to the executive, they will be the ones to determine what specific “vulnerabilities” exist and whether CBDCs or stablecoins will be the solution. The executive also believes that the two can coexist as long as stablecoins remain stable and decentralized.
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