The Banking Executive Magazine - October Issue 2022

ISSUE 166 OCTOBER 2022 the BANKING EXECUTIVE 1 Editorial THE FUTURE OF MONEY Investors are in shock due to the recent plunges in crypto assets. But the future of money is undoubtedly digital. The question is, what will it look like? Digital money has been developing for some time already. With the help of new technologies, access to financial services and goods should become more democratic. A main goal is to achieve much cheaper, instantaneous domestic and cross-border payments. The gains could be especially great for people in developing countries. Not every form of digital money will prove viable. Bitcoin, now down nearly 70 percent from its November 2021 peak, and other crypto assets fail as money, among others. While they are actively traded and heavily speculated on, prices are unattached to any underlying economic value. Stablecoins are designed to rein in the volatility, but many have proved to be anything but stable. Regulation is key! The regulatory fabric is being woven, and a pattern is expected to emerge. But the longer this takes, the more national authorities will get locked into differing regulatory frameworks. A globally coordinated regulation to bring order to markets, helps instill consumer confidence, and provide a safe space for innovation. Meanwhile, central banks are considering their own digital currencies. Central banks should harness the technological innovations offered by crypto while also providing a crucial foundation of trust. However, Privacy and cybersecurity risks can be managed with responsibly designed central bank digital currencies. It’s too early to tell how the digital landscape will evolve. But with the right policy and regulatory choices, we can imagine a future with a mix of government and privately backed currencies held safely in the digital wallets of billions of people. Dr. Joseph Torbey, Chairman - World Union of Arab Bankers