Davos 2022: A conversation on the present and future of CBDC

Editor’s note: The following is a conversation between Dennis Gada, Industry Head for Financial Services at Infosys, and Yuval Rooz, Co-founder and CEO of Digital Asset. It has been lightly edited for clarity.

Dennis Garda: Hello, my name is Dennis Gada. I'm the Industry Head for Financial Services at Infosys. It’s great to be here today on a sunny day at Davos. With me here today is Yuval Rooz, co-founder and CEO at Digital Asset. Yuval, can you tell us a little bit about Digital Asset, the vision and the mission of the company?

Yuval Rooz: Absolutely. Dennis, thank you for having me here at Davos. At Digital Asset, our vision is to create a Global Economic Network of seamlessly connected businesses. What we mean by that is, we are creating products and technology that allow users to build data systems. Upon those data systems, users are putting their assets and allowing those assets and value to transfer seamlessly, both within their organization and across organizations. 

Dennis: That's great. Infosys is a global, next-gen digital services company. As partners of Digital Asset, there are a lot of things we can do together. So it's been great to be here at Davos the last few days. It's the sixth time for me. This is obviously a very different “spring Davos,” but I've heard a lot of conversations on the geopolitical scenario that's ongoing, and a lot of conversation on macro economy and the recession and so on. But I think the most interesting part of the conversation we are having is around digital technologies, on innovation driven by technology and how that can impact businesses and also help resolve some of the impact that these situations will create. How's it been for you at Davos over the last few days?

Yuval: Yeah, it's a good observation and I think pretty similar. I think that what we're seeing is that geopolitics and changes in the world are happening at an accelerated pace. A lot of the customers that we're talking to here are very interested in thinking about how technology and digitization not only allows them to solve problems that they think about today, and allows them to offer new products faster and more efficiently, but also about, well, can these systems allow us to adapt faster? How do we think about reactions to sanctions or to changes in geopolitics? I think that's one area that we're seeing quite a lot of interest from customers.

In addition to that, which to me is very important, is global warming and this idea of energy transition. I think that the conversation is now starting to move more into an area of practical projects that are being worked on, rather than just ideas. We followed up with customers that we are already working with on some of these projects, in addition to talking to some of our existing clients about new initiatives that they are either thinking about starting or are planning to start next year.

Dennis: That’s great. One of the topics that I picked up in several conversations here was also around central bank digital currency. I know Digital Asset released a white paper on CBDCs and the impact on cross-border payments. Any insights that you'd like to share, Yuval?

Yuval: Absolutely. Yesterday I participated in a panel with the CEO of MasterCard and BIS around the topic of CBDCs. Similar to the previous topic of regulation and geopolitics, one focus in the paper is around creating regulatory framework standards on how to think about CBDCs, and then also thinking about the technology requirements that are needed, such as not being locked into one platform, the interoperability across platforms. Those are some of the areas that we are thinking about CBDCs. How about Infosys? 

Dennis: As we've all seen in the last couple of years, the digital acceleration has impacted several industries, but especially financial services. The way we look at it, CBDC is really a big step forward towards digital currencies. It helps to solve a lot of problems. There is interest from some 100-plus governments in at least doing research and potentially launching CBDCs. I think it helps to solve the problem of financial inclusion, digital payments, having a common source of growth, bringing more efficiency to the process, reducing the cost to serve, and so on. There are significant benefits for the entire financial industry ecosystem from CBDCs, but there are challenges also to be solved.

There are concerns around privacy, around security, hacking, et cetera. Like any new technological innovation, it's something that will evolve. We are talking to many of our clients quite actively on how we can help address some of those challenges, but also leverage the benefits that innovation like this will help. I believe that it can transform the landscape, especially for payments in several countries and several close-to ecosystems. So I'm quite bullish, and I do think that it will coexist: the physical currencies will be there. There'll be crypto, there'll be other kinds of currencies, and CBDC will be a very important part of the entire ecosystem of digital payments. What do you think?

Yuval: I totally agree, and I think that privacy, as you stated, is going to be one of the key elements. And then one of the things that we talked about in the panel is also working on educating and creating a lot of trust in the system. We are in a digital era where cybersecurity and tracking devices and all of these things are coming to the forefront of concern for a lot of citizens. So I think an extremely important part of the journey to make it successful is to work on education and instill trust in the system.

But to me, what's more exciting is some of the numbers that you're seeing around CBDC: 90% of central banks are now either actively working on CBDCs, experimenting with CBDCs, or exploring what it means for them to have a CBDC. There are three projects that are already in production, running globally. To me, that's very exciting and very similar to the transformation that happened from open banking. I think when CBDCs and digital payments are live and in production, we are yet to even understand the amount of innovation that will happen as a result.

Dennis: Absolutely. So I think exciting times ahead for the entire financial services industry, and these are the disruptions that people have been waiting for in the financial services industry. Thanks for your partnership through Digital Asset. We are doing a lot together in the market and hope to do a lot more in the future.

Yuval: Absolutely. Thank you, Dennis.

Dennis: Thank you.


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