Expert doubts CBDC as an alternative to cash

In current models CBDC will not replace cash and will not be suitable for everyday transactions. The Copper research department head, Fadi Abu Alfa, according to The Block.

The expert called the central bank issuing national digital currencies a ‘mammoth’.

According to Abu Alfa, the monetary regulator lacks the ‘talents’ and tools to launch a fully automated decentralized analogue of cash.

“Each central bank project creates its own isolated approach, and the retail wallet infrastructures do not yet exist,” he explained.

In a model of CBDC issuance via intermediary banks, consumer trust could become an issue.

“Digital currencies issued by institutions could lead to chaos […], if a scandal about one of them emerges,” he added.

The expert pointed to the difficulties of creating trading pairs and difficulties in maintaining a link between CBDC brands. As an example, he cited the collapse Silicon Valley Bank.

According to the analyst, the decisive factor for functional interoperability has not been properly accounted for. Current projects point to multiple blockchains with intermediaries controlling the flow.

“Is it misguided to pursue common standards and use blockchain so that everyone must simultaneously agree on CBDC design and structure worldwide? Models must ensure integration, not vendor lock-in. Each central bank will have its own considerations and requirements,” the expert concluded.

As reported, IMF will develop a platform for national digital currencies, according to reports.