According to Douglas Arner, director of the Asian Institute of International Financial Law at the University of Hong Kong, international interoperability will become the foundation during the CBDC race.
CBDC compatibility is one of the biggest opportunities
Speaking at today’s Unitize blockchain conference, Arner argued that interrelationships between various global economic systems will become “one of the biggest challenges – and one of the biggest opportunities,” because more and more countries around the world are getting involved in creating their own CBDC projects.
According to Arner, the Chinese financial system already has some predisposition to cross-border adaptation of the fast approaching digital yuan. The expert gave an example of SWAP transactions that have been introduced by China over the past few years in cooperation with dozens of countries around the world.
“If we think about the Chinese CBDC proposal at the moment, it is largely limited to operating in the context of physical and electronic boundaries. But you can imagine how in the context of these electronic boundaries, if the system integrates, for example, with SWAP transactions that are carried out in many different countries, this type of RMB electronic area can be extended externally. “
The United States, the EU and China will have the greatest impact
In addition, Arner listed three financial institutions that appear to have the biggest advantage in the struggling CBDC race. These include Fed Reserve, People’s Bank of China and the European Central Bank, which he described as “the main central banks that issue currency”:
“These are different animals than all others. What Canada, Sweden, the United Kingdom, Singapore, Australia and Saudi Arabia can do is really interesting and nice, but the rest of the world potentially won’t accept it in the context of large economic or financial transactions. “
Arnern stated that:
“There is definitely an element of potential geopolitics – not necessarily competition, but potential alternatives or even fragmentation in the future.”
A few days ago, we wrote about the head of Visa – Cuyu Sheffielda, who believes that the central bank’s digital currencies, i.e.CBDC, may be one of the most important trends in the coming decade.