Financial Experts Share Cautions Take on CBDC Adoption ByJimmy AkiPRO INVESTOR Updated: 10 March 2020 The intersection between crypto and blockchain and the traditional financial industry has been explored significantly of late, with various experts giving their opinions on how an alliance could lead to more success. Earlier this month, three of such experts attended the Bitcoin Expo 2020 at the Massachusetts Institute of Technology (MIT), where they discussed some of the issues that challenge that Central Bank Digital Currencies (CBDCs) could help to solve. No Need to Unnecessarily Jump on the DLT Trend At the meeting, Sonja Davidovic, an economist with the International Monetary Fund (IMF), advocated for caution in the implementation of CBDCs, explaining that they shouldn’t let their desire for technological innovation to override their need to vet systems. She added that many had joined the blockchain bandwagon without necessarily understanding what it means or what it does, and when major central banks do the same, they could be setting themselves up for failure. a weak and weakening $ does add additional stress onto the global financial infrastructure.i would expect further liquidity hiccups and other hard to explain $ flows. potentially.the fed will be on overdrive, with little visibility.more central banks will call for CBDCs. — pascalb?uvier ≠ (@pascalbouvier) March 8, 2020 Davidovic also explained that despite the many proofs of concept that banks now have with respect to DLT systems, none has been able to show the level of interoperability and privacy that a global currency will need to have. Her pitch ended with the point that banks will need to outsource the development and implementation of their blockchain systems to third parties – a move that could expose them to a myriad of risks. “It’s about the weakest link. You can have a secure system, but if the people who’re operating the system click on a phishing email or allow a security breach, your most robust system is not going to help with security.” The Possible Future of the Global Financial System At the same time, Robleh Ali, a research scientist at the MIT Digital Currency Initiative, predicted that CBDCs would evolve to take on different forms. Clarifying, he said, “You’ll likely end up with a hybrid in the end. I don’t think every central bank would choose the same system. How they interact with each other will be key, so you can sort them into a single system.” Bob Bench, the director of applied fintech research for the Federal Reserve Bank of Boston, also shut down the notion that banks could simply adopt an existing digital currency by explaining that these assets won’t be able to scale to meet the needs of the banks effectively. The speculations surrounding banks and their adoption of digital currencies still depends largely on the banks themselves, as several policymakers have already made their stand known. Countries like Japan and Dubai are currently on the fast track to implement blockchain and crypto into their financial spaces, albeit for various reasons. At the same time, many others – including and especially the United States – seem to be on the fence about it. A working group of central bank policymakers has been studying the potential effects of adopting CBDCs since the World Economic Forum in January, and while the date of their presentation is yet to be known, it’s expected that their ruling will play a significant role in shaping how central banks will view CBDCs moving forward.