Andy Coyne, Co-Founder and Chief Product Officer at Cobalt, said:

“The ECB’s announcement that it is starting its digital euro project is a welcome development and it makes sense that it wants to spend two years in an investigation phase to address key issues regarding design and distribution. It’s vital that the Euro CBDC will be interoperable so that PvP or atomic settlement becomes possible between currencies, and the industry can enjoy the many benefits this will bring. These include the 24/7 operation of a digital ledger aligning central and commercial bank operations with the global economy, the cost of issuing cash decreasing, forgeries becoming impossible and settlement becoming central bank backed with the commercial banks facing their clients.

“It’s also important that as an industry, we don’t just focus on CBDCs as these only come into play at the end of a transaction when the central bank’s ledger is updated. The big problem is the old, cumbersome technology which is the spaghetti within many financial institutions’ back offices and crucially, is poor at linking to other systems. The data that banks use is inconsistent and extremely difficult to decipher, leading to multiple errors which require manual intervention. In my view, the industry should also be focusing shared infrastructure and tokenisation at bank level as this would provide fast, secure technology, standardised, clean data and much-needed interoperability throughout a transaction, potentially saving banks billions every year.”