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.
So, expect to see more working groups around CBDCs such as the one launched in September this year by R3, which seeks to establish the technical and governance requirements of a CBDC.
Blockchain’s recognition beyond its crypto roots
With the events of this year prompting companies to take the leap into digitally transforming themselves, blockchain will be a key part of the solution as businesses search for ways to adapt and stay efficient in the “new normal”.
This mass digitization has, and will continue to accelerate technology solutions into the public sector alongside private businesses. As the world evolves into a post-Covid-19 landscape, the blockchain community must help public administrations understand the options they have in developing solutions to policy areas that have proved a hinderance during this crisis. Temporary solutions have been implemented, but permanent ones will be found in digitalization, and only those that place data privacy front and centre will win the backing of the public. Blockchain and self-sovereign identity will be an essential component of that new world.