Stanley Yong, a global lead in central bank digital currency (CBDC) solutions at IBM, thinks CBDCs can reduce the risks that caused the 2008 financial crisis.
CBDC or national digital currencies are virtual currencies that are issued and controlled by the federal regulator. CBDCs are not decentralized, instead, they represent cash only in digital form.
Yong shared his views on how to overcome the fragmentation of existing digital payment systems during an interview for CNBC Squawk Box on November 14. He explained that CBDCs are:
“The only way you can have the certainty of settlement that is required for financial services, especially when you think about the kinds of risks that came about during the Lehman crisis of 2008.”
Stanley Yong suggested that the crisis of 2008 was triggered by“a lack of confidence in the delivery versus payment mechanisms that were available at that point in time.” He suggests:
“Combining what central banks have in terms of digital systems for money transfer [...] with the delivery mechanisms for all sorts of commodities, derivatives, and stocks in a blockchain system, flexibly […] would be the way we get rid of the kinds of risks we saw in 2008.”
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