[Coinlive x GWEI Summit 2022] Central Bank Digital Currency (CBDC) and Cryptocurrency

Coinlive reporting live at the GWEI Summit 2022 in Singapore. The panel, moderated by Chris Holland (Holland & Marie), along with Tansaya Kunaratskul (Bank of Thailand) and Chua Tju Liang (Ethereum Foundation), is in a discussion about Central Bank Digital Currency (CBDC) and cryptocurrency. 

Moderator: What is the relationship between central bank, currency, and cryptocurrency?

Panellists: Central bank envision CBDC as a digital form of cash, accessible by the public. But for crypto, there could be some restrictions, like it might be hard for some people to access it. With respect to building the infrastructure of global transactions, where there isn’t a single centralised money authority for the world, cryptocurrency has the ability to act as a credible neutral platform, where everybody can participate without jurisdiction. However, CBDC is unable to do so as it is restricted to the domestic economy.

Moderator: What is the difference between retail and wholesale CBDC?

Panellists: Wholesale CBDC can only be accessed by financial institutions; retail CBDC is accessible by all people, imagine cash in digital form.

Moderator: Can you define decentralisation?

Panellists: Everyone has their own idea of what decentralisation is. To the panellists, it is a shift of control and decision-making from a centralised entity to a distributed group of unique individuals, so no one entity has the ability to dictate the terms against all the other stakeholders in the system.

Moderator: Could you share what you are doing in Thailand besides CBDC?

Tansaya: The Bank of Thailand started the CBDC project in 2018. Starting as a wholesale CBDC, we thought it would be easier to see the interaction between different financial institutions. The project started with the pure objective of experimenting with blockchain technology and seeing how we can apply the technology to build the CBDC. The first phase is all about the simple payment functionalities between banks. After that, we apply the blockchain to finance functionalities like bond issuance. The last phase is collaborating with the central bank of Hong Kong, to experiment with the CBDC cross-border payment.

Moderator: There is a ton of regularity going on right now, what do you think is the most important thing going on?

Panellists: Biggest risk is that regulators are trying to force blockchain and crypto activities into a box that doesn’t fit. Traditional finance had been structured in a particular way to worry about counterparty risk meanwhile blockchain changed a lot of that. The blockchain industry is hopeful for appropriate regulations tuned to the characteristics of how blockchain works.

Moderator: What do you see as a key difference between DeFi and CeFi in terms of regulatory and legal risk?

Panellists: The primary difference is the question of whether there is intermediary counterparty risk. For instance, the bank is exposed to the credit risk of borrower from the bank and also the intermediary risk of the entity in the middle that is taking the deposit. In a fully decentralised system, the platform is free of intermediary risk. Being decentralised, there is no single party or decision-making power over the platform. Whether or not a platform is truly decentralised, the participants have to do their own due diligence.

Moderator: Please explain the future of CBDC and cryptocurrency in short.

Panellists: Both cryptocurrency space and government space are all working towards the same goal: an open and stable infrastructure everyone can use that seeks financial inclusion for every participant in the work that is not controlled by any single entity.

Reported by: [Coinlive] Nell