Late last month the Bank for International Settlements issued a report which strongly supported the concept of CBDCs as the blockchain-based technological advancement which would change the way the world interacts with money. In the report, the BIS indicates that a Central Bank Digital Currency would offer protections against nefarious activity while still offering benefits in the realm of cross-border payments.

“The BIS indicates that it believes that most functional CBDCs would operate in conjunction with the private sector, instead of in competition --- a model which would eliminate many concerns of the naysayers who warn of the collapse of the private sector banking industry if we move to CBDCs. In the view of the BIS, central banks have a narrow focus, which would only be diluted by attempting to take on consumer-facing roles,” said Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.

“CBDCs are a concept whose time has come… They open a new chapter for the monetary system by providing a technologically advanced representation of central bank money. In doing so, they preserve the core features of money that only the central bank can provide, anchored in the foundation of trust in the central bank,” said BIS Head of Research, Hyun Song Shin.

“While there is a multiplicity of models from which a central bank may choose, essentially the central bank would be in control of ensuring that the technology functions as designed, in a safe, secure fashion. Then, the private sector would continue its role in serving as a go-between with the general public. This would be the type of model that’s being beta tested in China right now, with the private sector dealing with things such as onboarding, AML compliance, and executing payments,” explained Gardner.

Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.

“The BIS identifies security and the chicanery of bad actors as an ongoing issue with cryptocurrencies, which they believe CBDCs would correct. I’ve been saying, for years, that if the crypto segment wishes to expand, it must prioritize safety from hacks. Exchanges must do better in guarding against money laundering and other crimes against the public good. It seems clear that CBDCs are the future of finance,” opined Gardner.