On the third day of Davos, cryptocurrencies show regulators hinting that it could do more harm than good to the global economy. As Kriptokoin.com, we have compiled the crypto money agenda spoken in Davos for you.
Cryptocurrencies are on Davos’ agenda
Talks about blockchain on the third day of Davos show that the architects of the metaverse are still trying to understand what exactly is happening, and there are regulators who imply that central bank digital currencies (CBDC) can do more harm than good to the global economy.
The World Economic Forum (WEF) released two reports on the metaverse on Wednesday. In an effort to encompass the broad concept of Metaverse, reports show it as ‘an immersive, interoperable and synchronized digital world that will change the way we interact, work and play’.
Despite the hype around the metaverse created by Facebook’s transformation into Meta Platforms in 2021, the world has yet to witness or experience anything tangible. “It’s an evolving concept that doesn’t yet have a standard definition,” WEF head of media, entertainment and sports, Cathy Li, told a news conference Wednesday. defined as.
At the same event, Huda Al Hashimi, deputy cabinet minister for strategic affairs in the United Arab Emirates, said that open-ended questions about how the metaverse should be organized also require extensive testing. “We also see that regulators will act as referees rather than watchdogs,” Al Hashimi said. And these codes of conduct will really take precedence over formulating policies.’ said.
Different visions for the metaverse
Later Wednesday, a panel heard two very different visions for the metaverse. One of them came from Meta, where Chief Product Officer Chris Cox says he believes ‘one day this platform will be as important as the smartphone’.
Cox likened the metaverse he built to Instagram, Meta’s other social media presence ‘focused on providing tools to creators and builders’. He said it will include ‘spaces that are self-consistent, often offered by large corporations’, as well as start-up businesses and stores.
That said, the challenge will be to jump from one ecosystem to another with ease, where you can navigate online, for example, from Wikipedia to Google Maps, without losing consistency or connectivity. ‘For the metaverse, part of what doesn’t exist yet is the bridge,’ Cox said.
Pros and cons of virtual fiat money
Engaging different digital ecosystems, arguing for cryptocurrencies in a different way was also the subject of central bankers meeting with financial infrastructure bosses inside the Convention Center.
The discussion noted that interoperability as it is known in jargon comes with many challenges. Barriers to CBDCs are often related to conflicting governance and legal systems rather than technology, South African Central Bank Governor Lesetja Kganyago told the panel.
The panelists’ comments showed that there is still a long way to go to benefit from virtual fiat money, and there are many ways this could result in real damage to the world economy.
“When we find new innovations, it’s critical that they scale and protect against the potential cost of owning digital islands,” said Javier Perez Tasso, CEO of SWIFT, the messaging service used to make interbank transfers. Tasso said central bank digital currencies instead of consolidating payment systems could lead to further fragmentation.
There may be liquidity losses
There have been some limited success stories in trying CBDCs for both interbank and retail placements, but they do have their limits. Israel’s central bank governor, Amir Yaron, spoke enthusiastically of an experiment he is conducting to enable cross-border retail payments with Sweden and Norway.
However, he admitted that he has yet to solve the problem of anti-money laundering checks, which is one of the main reasons why cross-border payments using correspondent banking can be so slow and expensive in practice. There is also the question of who will set up any international center and whether the winner will be a group of central banks, the International Monetary Fund, or some private sector company.
Lieve Mostrey of the clearinghouse Euroclear, which is involved in an experiment with the French central bank to tokenize government bonds, warned that such experiments have costs, especially if they involve instant payments, such as potential liquidity losses that could delay transactions if the transition occurs. It is not smooth to any new system. ‘It’s about interoperability,’ Mostrey said. ‘If we don’t do this right, I think immigration becomes absolutely impossible.’ he added.
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