American economist and notorious crypto critic Nouriel Roubini has argued that if and when central bank digital currencies (CBDCs) are adopted, they won’t be based on blockchain.
Roubini — otherwise known as “Dr. Doom” for his prediction of the 2008 housing bubble collapse — made his comments during a joint panel with Ethereum (ETH) co-founder Vitalik Buterin at the Deconomy conference in Seoul, South Korea, on April 4, a Cointelegraph correspondent reports.
As previously reported, CBDCs are distinct from cryptocurrencies in that they are digital currencies issued by a central bank whose legal tender status depends on government regulation or law.
During the panel, entitled the “Fundamental Value of Cryptocurrency and its Sustainability,” Roubini attempted to deflate enthusiasm about central banks’ research into the issuance of CBDCs, arguing that they won’t be issued on the blockchain or other distributed ledger technologies. He said:
“As soon as there is news about [CBDC issuance] the people in crypto get excited and say, see it’s becoming mainstream [...] but if you look carefully about what they want to do, if and when they’re going to do it, it’s not going to be blockchain, it’s not going to be crypto [...] it’s going to be on a single ledger, secured.”
Roubini analyzed the prospective impact of CBDC adoption, noting that only banks have access to the balance sheet of central banks in the current financial system, and private individuals and corporations thus have to go via the banking system as an essential intermediary.
Rehauling this system with a CBDC, he thus argued, could bring significant transaction cost- and time- efficiency gains, with the upshot that, if adopted, CBDCs “will displace everything else [...] not only cryptocurrencies [...] but also bank deposits [...] and digital payment systems such as PayPal.”
Aside from his remarks on CBDCs, Roubini reiterated many of his now well-known criticisms of cryptocurrency innovation — i.e. that international governments will categorically quash any value transfer system that is truly anonymous, and that decentralization in crypto is a myth.
As Cointelegraph has reported, a new analysis from the World Economic Forum has stated that at least 40 central banks worldwide are conducting CBDC research projects and pilots with blockchain technology, which aim to address such issues as financial inclusion, payments efficiency and cybersecurity.