Exploring the Future of Money and Tokenisation
Left to right: Sabih Behzad (Deutsche Bank); Ambre Soubiran (Kaiko); Nick Kerigan (Swift); Ed Budd (Adhara)
Do We Need Multiple Forms of Money?
Sabih Behzad posed a thought-provoking question about the necessity of various forms of money during a recent discussion. He inquired whether Central Bank Digital Currencies (CBDCs) are essential when private currencies can serve similar purposes, and questioned the abundance of cryptocurrencies available.
Rethinking Cryptocurrency
Ambre Soubiran, CEO of Kaiko, expressed skepticism about the number of cryptocurrencies and layer one solutions, suggesting that only around 50 assets should be seen as investible. She highlighted that in her firm’s analysis, merely 10 of these assets—excluding CBDCs—could realistically serve as benchmarks that are investible and hedgeable.
BBVA Ventures into Crypto Trading
On March 10, shortly before the conference, Spain’s financial regulator, CNMV, granted approval for BBVA, the nation’s second-largest bank, to offer trading services for Bitcoin and Ether via its mobile app. BBVA plans to manage client assets through its internal cryptographic custody platform, thereby reducing reliance on third-party custodians.
The Role of Central Banks
“Central banks do not want to be fully disintermediated in financial flows”
Behzad explained the distinction between stablecoins and CBDCs, emphasizing that central banks aim to provide a fully digital alternative to cash in response to diminishing cash usage. He noted that while adoption isn’t the only goal, maintaining independent monetary policy is critical since central banks seek to avoid being sidelined by private money.
Tokenised Deposits as a Bridge
Edward Budd, co-founder of Adhara, introduced the concept of tokenised deposits, which serve as a link between modern cryptocurrencies and traditional banking deposits. These deposits aim to replicate the efficiency of crypto transactions while remaining within traditional banking frameworks, offering continuous availability and programmability.
The Shift Towards Tokenisation
“The ability to settle in central bank money is seen by the European market as a key factor in the adoption of new technologies”
Nick Kerigan from Swift noted the increasing momentum in the tokenisation of securities, with notable issuances occurring from financial entities, central banks, and fintech firms. He pointed out recent accomplishments such as the German development bank KFW issuing over €17.5 billion in digital bonds, indicating a significant evolution in capital markets driven by tokenisation.
