How CBDCs and stablecoins can coexist: FIS panel discussion
At the recent Future Innovation Summit event in Dubai, Cointelegraph moderated a panel titled “Stablecoins, Central Bank Digital Currencies and Cross-Border Payments” to explore whether and how CDCs and stablecoins can co-exist.
The panel included Jorge Carrasco, Managing Director of FTI Consulting; Nikita Sachdev, founder of Luna Media Corporation; Jagadeshwaran Kothandapani, Head of Middle East and Africa for Citibank; and Itu Kuninen, founder of the gold-backed stablecoin project DGC.
The group explored various topics, answering the question of whether stablecoins and central bank digital currencies (CBDCs) could co-exist. According to Kuneinen, CBDCs can be built on the blockchain, but they will be “centralized by nature” because they will be issued by the government. The executive argued that some risks come with government control. He explained.
“Let's just say they don't like some political rivals. You can block another party's property with one click. So what guarantees that they won't use it? Or if they are a small country, they will be pressured by a big country.
On the other hand, the executive argued that it might be preferable to create a framework for a stable coin that is not controlled by a single private company. We can have a framework that anyone with assets and some technology can put out. So, we could have more banks issuing the same stable coin rule,” he added.
Sakdev gave a different opinion on the topic. According to the executive, if the government already has the intention of freezing someone's digital assets, there are different ways to do it. Additionally, Sackdev argued that the government's exploration of using blockchain for CBCs could be a developmental step that could eventually lead to a fully decentralized and fully Web3 move.
While the executive appears to defend CBDCs, she stated that she is not yet in favor of CBDCs or stablecoins as recent events such as the collapse of TerraUSD (UST) show that stablecoins can also pose a risk to the world of their own set.
Related: Singapore's central bank says ‘timely transfer' for statcoins for three business days
Carrasco added that since the technology is still in its infancy, it is not possible to see problems in the way of development. “I think it's very common to see failures and see lessons as we move forward,” he explained. The executive believes that CBDCs and stablecoins will be mutually exclusive in the future. He added:
“I think they live together. And maybe in a few years we'll see a national body that oversees the CDCs and the interactions between them and prevents any government from acting in the public interest.
Meanwhile, Kotandapani echoed the sentiments expressed by the other panelists and added that it is always up to the companies or users to decide which solution is right for them.
According to the executive, they will be the ones to decide which specific “pain points” exist and whether CBDCs or stablecoins will be the answer to that. The exec believes the two can co-exist as long as a stablecoin is stable and decentralized.
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