Nov 15, 2023

Kristalina Georgieva, Managing Director of the International Monetary Fund, said recently in a speech that central bank digital currencies (CBDC) can replace physical money, especially in economies where cash deployment is costly.

Video transcript

An IMF managing director said Central bank digital currencies can replace cash in island economies and offer resilience in more advanced economies. During a speech at the Singapore Fintech Festival, Laurence, curious to get your thoughts on this, this, of course, as presidential candidates in the US, on both sides are condemning CB DCs. I think just glancing at the speech, 11 thing that stuck out to me, it was this whole idea. Uh and it seemed to be a lot of what the speech was about. The idea of a cross border payments particularly. I, I mean, on the day to day basis will CBD CS uh go into effect? No, that's not really like, it's not really what uh she was envisioning here. This really has to do with the large cross border payments that take time to, to process and, and transact and things like that. Um Yeah, and the, it seems that the idea that CBD CS will uh make it a lot easier uh for those things to settle uh much quicker than we have in place currently. I Yeah, and I think I've said this a few times here is that and as a former FX trader, we know Spot and FX is actually today plus two days. So in other words, if you're trading Spot, your settlement date is actually Friday, today's Wednesday. Uh And then if you're trading it on Friday, the settlement date will be Tuesday. So it's two business days and that is a tradition except for Canadian dollars. Uh By the way, that's a one day settlement when it's against the US again tradition. Um That, that sort of world in which it takes a couple of days to settle cash transactions and things like that in a CBD C world could happen within seconds, which we didn't have before. I mean, it probably could happen now. Uh but more likely in a, in a CBD C world where that can happen pretty quickly regularly and in a trustworthy method. So that's kind of where, where she was going with that speech. I'm curious to see, I, I guess how CBD C's roll out. We're seeing stable coins kind of fill um the gap fill some of the purpose that you were just speaking about in central and Latin America. Um I know we're gonna talk about Stablecoins much more in the show, but I just before we get to our next guest, I, what you're describing Lawrence, it feels like Stablecoins can do the same thing. It, it can and that, but it would require a few things. Um And I think one of the, the, the big issues, at least with stable coins is uh we have questions about what's really backing them and we can say, oh, you know what they, they print attestations, not audits, they print attestations all the time. Why we can trust them, et cetera, et cetera, they're kind of centralized, right? The same way. So if I have to deal with the centralized entity, I'd rather do it with the, with the entity that's actually issuing the dollars. We're issuing the euro, which is the central bank. In that case, the central bank of Europe, European Central Bank or the Federal Reserve Bank or the Reserve Bank of Australia or, or II, I think in Canada it's, it's done by three guys in a hut up in Yukon. Uh and they use beaver pelts. I think that's how you guys make money, uh print money. I, I don't know every time to take a dig at Canada Lawrence le will do that. II, I do my best, you know, um you know, it's only like five teeth between them, but that's a different story. Um Sorry, but, but the point is that if you're gonna go with something, you'd rather go with something that you'd rather go with a uh the actual issuer. If you're, if you're a large corporation, you, you don't want to put anything at risk, what you really want to do 100 like a billion dollar transaction using tether if you're like GE or, or not ge, I don't think they have a billion dollars of anything right now, but let's say you're Apple or one of these big corporations? Are you really gonna use tether?

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