CBDCs and stablecoins: What role will they play in the future?

In 2022, the US Federal Reserve announced that it had been developing a “wholesale” central bank digital currency (CBDC), designed to speed up transfers between banks around the world. The aim of the new network would be “to reduce settlement risk in cross-border, cross-currency transactions.”

But there are questions around the introduction of CBDCs, with some observers wondering how much value these initiatives will actually bring to end users and whether they pose serious privacy concerns. 

They are not the only digital currency being promoted. Stablecoins — a privately issued digital currency designed to hold constant value against a reference asset — are predicted to reach a value of almost $3 trillion USD in the next five years. Some say stablecoins can do everything a CBDC can do and more, with fewer downsides. 

This week, host Cara Hayward is joined by Clara Medalie, Director of Research at digital assets data provider Kaiko, and Sean Ryan, Vice President and Associate Director at business data and analytics firm FactSet, to investigate the role both CBDCs and stablecoins will play in the financial system of the future.

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