Who will control the digital money infrastructure? Our Head of Partnerships, Gonçalo Lima, was invited to answer this question alongside other industry experts at the Future of Finance’s Digital Money event last week.
Moderated by Dominic Hobson, Co-Founder of Future of Finance, Gonçalo and the other panellists explored a range of topics including stablecoins, tokenised assets, and the role of banks and central banks in today’s digital economy.
This article highlights five key takeaways from the event.
Legacy infrastructure isn’t going anywhere
It’s clear that despite progress in payment technologies, particularly when it comes to speed and user experience, core infrastructure is still reliant on legacy systems. Innovation must carefully integrate with current infrastructures, without compromising on stability or trust. This is especially true for cross-border payments, which remain slow, costly and lack visibility into transaction history because of its fragmented, point-to-point nature.
We can’t forget about regulation
We know that regulation primarily serves to protect consumers. Financial institutions now recognise the potential that programmable, self-executing money brings, but successful implementation depends on striking the balance between this goal and championing innovation.
The future is interoperable
Projects like the Regulated Liability Network (RLN) demonstrated how powerful tokenisation can be. However, the future of money is expected to be interoperable, combining the strengths of multiple systems rather than being dominated by one. As a society, we still want a highly secure way of transferring value, whether that be with fiat or digital currencies.
The need for reversibility
Banks are increasingly looking at how they can harness DLT within payments, it can reduce costs, improve operational efficiency and create new business lines. However, by diverging from traditional systems that allow refunds and reversals, DLT’s immutability poses new challenges. While it offers benefits like enhanced security and trust, it also raises concerns about the inability to correct errors or address fraudulent transactions. To combat this, it’s essential that the necessary checks are conducted before putting transactions on DLT.
Public vs. Private
Public-private partnerships and governance structures are critical but take time and resources to build, which can slow down implementation and adoption. While permissioned blockchains are essential for regulatory compliance (KYC/AML) and control, hybrid models can offer the perfect balance, publicly viewable but privately governed and restricted.
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