R3’s 2021 predictions: Digital currencies breaking into the mainstream

This is a guest opinion post from David E. Rutter, founder and CEO of enterprise blockchain firm R3.

In 2020, we continued to find ourselves at a critical juncture in the evolution of money as the need to modernize the paper-based economy has never been more apparent than during the pandemic. Central banks all around the world found themselves right at the centre of this digital revolution. For example—Riksbank, the central bank of Sweden, announced a pilot for e-krona on Corda to explore the possibilities of issuing a CBDC. 

Earlier this month, R3’s Corda technology was successfully used in a proof-of-concept to integrate tokenized digital assets and central bank money. Delivered by the BIS, the Swiss National Bank and SIX, Project Helvetia explored the technological and legal feasibility of transferring digital assets. It did this through issuing a wholesale CBDC onto a distributed digital asset platform and linking the digital asset platform to the existing wholesale payment system.

In 2021, central banks all over the world will continue to explore CBDCs to support digital transformation and support wider aims of financial inclusion. 2021 will be the year that the initial excitement around CBDCs evolves into a meaningful and stable exploration of their uptake from central banks. It will become clear that it isn’t a race, it’s about getting it right. What will become clear is the need to differentiate between different technologies available to support CBDCs. Central banks are likely to become more judicious in assessing the different technologies that are at their disposal to support a digital currency. The underlying architecture will become a larger consideration, as too will the different models supporting a CBDC. Private and public partnerships will emerge as the most sustainable model to support CBDCs as a long-term currency alternative.

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