BFC Bulletins Monthly News Digest
On the first day of the Sibos 2021 online conference, McKinsey released it annual Global Payments Report. Overall, the report outlined a positive (albeit somewhat unbalanced) forecast for post-COVID financial sector growth. Of particular interest was the report’s section on central bank digital currencies (CBDCs). According to the report, recent trends toward cryptocurrencies and CBDCs (especially with the relative dramatic reduction in the use of cash) mean that companies need to prepare for “inevitable changes on the horizon”. In particular:
- Financial service infrastructure providers need to monitor the suitability of their design choices for future interoperability with digital currencies.
- Retail financial institutions, merchants and payment service providers need to consider how much infrastructure investment is needed for the implementation of multiple CBDC and stablecoin networks.
- Private-sector financial institutions need to consider the best pace for introduction of CBDCs.
- Chief risk and financial officers need to evaluate the broad impact of digital currencies on bank liquidity and capital requirements.
- Governments and central banks regulators need to balance countervailing factors such as overregulation vs. measured regulation in their assessment of the impact of private currency on the efficacy of monetary policies.
- Investors need to anticipate the impact of CBDCs on their assets.
