Watch June’s policy updates where Riccardo Tordera, Head of Policy & Government Relations at The Payments Association talks with Brunello Rosa, CEO of Rosa & Roubini, about “The Macroeconomic Case for Digital Currencies”.
They start by discussing why central banks are thinking of introducing CBDCs, and Brunello concludes that central banks are to respond to the initiatives by the private sector, from where most means of payments have been developed in the past.
The conversation is then steered towards what the implications for the banking system could be. Brunello suggests that the banking system seems threatened by the introduction of CBDCs, especially if it means they have to do all the “dirty work” with KYCs and AMLs.
So, what could be the major Macro risks of introducing CBDCs? Obviously, there could be cyber risks and privacy risks, but according to Brunello, the most relevant from a Macro perspective is if all transactions go through a central entity. This provides for a single point of failure, meaning if a cyber-attack were to happen, the repercussions would be catastrophic. Instead, we need to aim for a more decentralised structure.
The conversation is rounded up as Riccardo asks whether the digitalisation of money will enhance our economy and do as much for us as the development of the internet did.