Tether’s CTO, Paolo Ardoino, states that CBDCs would mostly replace old payment systems. In addition, CBDCs will use private blockchain as a modern and cost-controllable tech infrastructure. Although central bank digital currencies (CBDCs) are on the rise, Ardoino thinks that private stablecoins will continue to play an important role.
Furthermore, Ardoino shared his thoughts on an ongoing debate in a Twitter thread. The main topic was CBDCs and their potential in the present payment system. According to him, the old centralized payment networks like SWIFT will be replaced by CBDCs. As a result, using private blockchains for most transactions might become the new normal.
Following on, Ardonio explained the goal of CBDCs. He notes that CBDCs aren’t about digitizing fiat money. This has already happened. Most bank transfers and credit/debit card transactions will be settled via CBDCs. As a result, it will leverage private blockchain as a modern and cost-controlled digital infrastructure.
1/
Few thoughts on CBDCs
– FIAT is mostly digital already
– but it relies on an outdated tech infra built 30y ago and kept together with rubber and bands
– and it requires ton of maintenance with enormous costs— Paolo Ardoino (@paoloardoino) March 10, 2022
Stablecoin Market Remains Significant
Tether’s CTO emphasized the impact of CBDCs on stablecoins. Even in the era of government-issued digital currencies, private stablecoins like USDT will remain significant. Accordingly, stablecoins will not be affected at all since they offer users many options. Additionally, private stablecoins would allow users to move across chains and be available on multiple blockchains of their choice. In comparison, CBDCs will not be able to do something similar.
2/
– CBDCs are based on the idea that #tether had 8 years ago creating the first stablecoin
– CDBC will replace SWIFT etc
– banks will accept transfers via CBDCs as any wire
– CBDCs will settle most of credit/debit card flow, especially over the weekend— Paolo Ardoino (@paoloardoino) March 10, 2022
In light of whether CBDCs would reduce the importance of the private stablecoin industry, Ardoino responded. Moreover, a debate erupted in the United States after numerous senators called for regulation of the stablecoin industry.
As reported by the Atlantic CBDC tracker, 86 nations are building their own sovereign digital currency. This has resulted in a growth of more than 100% since May 2020. Statistics show that 9 countries have already launched their CBDCs. Meanwhile, 15 countries are now in the trial phase of their CBDCs.
Overall, China is the leader in the CBDC race among the world’s main economies. Its digital yuan is working properly, and now they are testing it out throughout the nation. On the other hand, the United States has yet to wrap up plans for a digital currency. In the meantime, some European countries, including France and Switzerland, have begun cross-border testing.