Yet another in the plethora of postings on digital currency, this one by a senior at a Finnish tech advisory company. The posting in Finextra actually covers a fair bit of ground so worth a few minutes to read through.
As we have covered and will continue to cover development in this space, both through commentary at this channel and through member research, the bottom line is that no one really knows where this will end up, but for sure things will be quite different in ten years’ time.
‘The two main drivers of competition in digital money are geopolitical and technological – and they are intertwined. China is fast becoming the largest economy in the world and is already almost cashless as commerce is done on mobile platforms like Alipay and WeChat pay. China aims to further boost economic growth, whilst increasing state control, as it imminently plans to scale the use of digital yuan. As digital yuan transactions can be monitored and controlled by Chinese government, it could well allow more freedom in its use outside the country. How much boost the digital yuan will give remains to be seen but enough to add urgency on ECB and FED to progress on their competing digital currency projects.’
The author goes on to discuss various points such as the role of money and importance of payments in the global economy, declining importance of the dollar and Euro, UX for cross-border transactions, increasing importance of identity verification, etc. These are all compelling points and certainly worth a read through.
The author also gets into the CBDC discussion versus private currency, which is where Diem (formerly Libra) helped initiate the global rush to CBDC investigation and issuance.
‘The information benefit and resulting financial return of becoming an owner and issuer of global digital money is big – so big that there will be no lack of aspiring competitors from all backgrounds. With the roles of money decomposing, there will be room for several winners….We will most likely have different money for different purposes and competing against each other. This complexity will be hard to manage for the users and companies, though they can benefit from automation and programmability of money. For the payments and financial industry, surely, it will be a complete overhaul.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
