The enterprise-focused blockchain network for cross-border remittances Stellar (XLM) aims to become the platform for governments around the world to issue central bank digital currencies (CBDC). Stellar CEO Denelle Dixon hinted at the ambition while the consensus was being distributed.
Stellar wants a piece of the CBDC pie
Stellar, the decentralized blockchain protocol aiming to disrupt the multi-billion dollar cross-border payments industry, has hinted at entering the CBDC race.
During the distributed consensus, Dixon highlighted the problems with the current financial infrastructure, adding that in this space, unchanged for decades, there was an urgent need for constructive disruption. She took the example of the ongoing COVID-19 crisis, which has brought the inefficiencies of the current paper-based monetary infrastructure to the surface.
These drawbacks, Dixon said, are forcing policymakers, government institutions and central banks around the world to look for ways to make the current financial ecosystem more inclusive and digital. To achieve this, Stellar has considered how CBDCs can be implemented.
“CBDCs were exactly the type of digital money that Stellar was designed for to connect today’s real-world financial infrastructure to the digital blockchain world.”
McCaleb wants CBDCs in permissionless networks
Similarly, Stellar founder Jed McCaleb stated that while CBDCs may become an indispensable part of everyone’s life at some point in the future, Stellar is still remotely assessing the demand and regulatory environment surrounding CBDCs. This approach makes sense, considering that Facebook’s ambitious Libra project turned out to be an absolute wreck.
Answering the question of whether a government would choose to develop a digital dollar on a private blockchain.
“We have spoken to some governments around the world about CBDCs. I still think it’s pretty early for that, and especially early, to put these things out in a public chain, most of the time [governments] If they get caught in the nuts and bolts, they want to control it. So I still think the whole CBDC story is still a long way off.“
McCaleb added, however, that if a government decides to move a CBDC forward, he hoped that it would choose a permissionless chain like Stellar’s. The founder of Stellar said that there is no benefit in issuing a CBDC in a private chain, as it technically already exists in the form of digitized dollars held by central banks in all countries.
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