Central Banks, CBDCs and Financial System of the Future — Principled Discord Pt.6

this week’s episode of Principled Discord, our host Thierry Arys Ruiz is interviewing Alexandre Kateb, Economist, Founder and CEO of the “Multipolarity Report” and Adjunct Professor at SciencesPo, on central banks’ relations to innovations, new technologies, and how to navigate this new financial world. Mr. Kateb has discussed how central banks have been hesitant to adopt new financial innovations such as cryptocurrencies as they are often seen as an opposition to central banks.

However, established players are increasingly entering the field; companies like Facebook, Paypal, and institutional funds. Central banks are now almost forced to consider DLT technology and study the viability of CBDCs as they come to realise that there is a real demand for cryptocurrencies. According to Mr. Arys Ruiz, “‘Big Tech’ companies are comparable to countries on their own: if you have many billions of users, you have the power of controlling; to a certain extent an economy within an economy”

Banks are adopting these technologies in a complete U-turn as in the very recent past, they had shown little interest. Mr. Kateb, believes that implementing these decentralized assets in the current system may lie on the shoulders of private entities.

Take a look at the latest stats of Central Banks’ increased engagement in creation of CBDC:

Bank for International Settlements, 2020

Mr. Kateb is of the view that “[CBDC] will enable transactions in a faster and much more straightforward way and can skip intermediaries, the banks, and allow people, individuals & companies to exchange money between them without the need to have a banking account.”

Moreover, he foresees a second revolution, a revolution in banking services that could disrupt the whole financial system. Here is a detailed illustration of the difference between managing fiat currency vs CBDC:

(Banking Hub, 2018)

Moreover, Mr. Kateb believes the main game-changer will be the release of Digital Yuan. The release is planned for 2022 during the Olympic Games that will take place in Beijing albeit sandbox trials and other experiments are currently ongoing.

(Tokeny, 2020)

When asked about a potential conflict between the two superpowers of the People’s Republic of China and the United States of America, and which one of the two he would bet on, Mr. Kateb answered that the stakes being too high there will probably be an attempt to find a consensus perhaps “something emerging to accommodate these two blocks” while there will most likely be some sort of “Monetary Cold War” and that the defining factor would probably be the Technology.

Follow the link to watch the full episode of Principled Discord Podcast with Alexandre Kateb hosted by Thierry Arys Ruiz, and learn from two industry leaders about upcoming changes in world’s financial system. Don’t forget to subscribe to Principled Discord’s YouTube channel to watch more episodes.

TARCO NGO is a nonprofit organisation with two main activities: TARCO THINK TANK (TarcoThinkTank.org & MonetaryReset.net) and TARCO Association (Tarco.ngo)