Cypherium | Partnerships Driving CBDC Adoption
As the prospect of Central Bank Digital Currency (CBDC) adoption looms larger and larger, the question on most of our minds has shifted. We no longer ask “will CBDCs be adopted” or even “when will CBDCs be adopted,” as a consensus forms among technologists, banking officials, and economic policy experts that this publicly administrated digital currencies are somewhat inevitable. Instead, we have begun to ask, “how can CBDCs best realize their enormous potential?” What actions must leaders in central banking and the blockchain industry take in order to assure that this technology helps our societies and our economies in the ways we know it can?
To answer this question, of course, we must bear in mind what the technology really is — its strengths, its needs, and its vulnerabilities. Currencies are, at their core, tools used to help individuals and insitutions relate to one another. They help us transact in a variety of contrasting circumstances and give us a common denomenator with which to associate and transact. While central banks might view their currencies in part as an extension of national autonomy, they are, in fact, expressions of accountability in both domestic and foreign relations. Currencies are, in their simplest understanding, general-use contracts.
The implication here, for the question of CBDC adoption, is a partnership-driven approach. The go-it-alone model of Bitcoin, for example, works so well because that technology aims to hedge against public regulation of economic activity and because so many users see BTC as a store of value, an asset that excels in being uncorrelated from major market trends. CBDCs would be a different kind of blockchain project, one that would necessarily involve the cooperation of major economic forces not yet enfranchised into the cryptocurrency space. Successful CBDC projects will be those that allow not only the interconnection of our current international economies, but also enable new forms of collaboration not yet practical under the current system. CBDCs may alter the wealth distribution among nations because they so radically reimagine the way currencies can operate; ultimately, those central banks that become sources of interoperability will become centers of tomorrow’s economic activity.
At Cypherium, we believe that there are three categories of partnership that together drive CBDC adoption: partnership among central banks, partnership among private and public financial institutions, and partnerships among technological innovators.
Our founding partnership with the Official Monetary and Financial Institutions Forum (OMFIF), and particularly its Digital Monetary Institute (DMI) is an example of strong relationships among central banks. The OMFIF Digital Monetary Institute was launched in May 2020 with a focus on payments instruments in wholesale and retail markets. In this space, blockchain providers like Cypherium and a handful of other industry leaders join in conversation with central bnks from around the world to discuss these new technologies and address their possible obstacles. It is here, in collaboration with central banks throughout Europe and Asia that we developed the Cypherium Digital Currency Interoperability Framework (DCIF), which allows CBDCs to transact both among one another and among private cryptocurrencies.
Our involvement with the U.S. Faster Payments Council is another kind of partnership, one focused on joint public and private financial solutions. The USFPC has assembled over 20 leading payments organizations as founding sponsors, that include SHAZAM, ICBA Bancard®, Visa, The Bank of New York Mellon, North American Banking Company, Open Payment Network, The Clearing House, The New England ACH Association, Ceridian, Mastercard, JPMorgan Chase & Co., Walmart Target Corporation, Goldman Sachs, First Data, TD Bank, and others. As a member, Cypherium has had and will continue to have meaningful conversations with important figures from all aspects of the adoption process. Like our partnerships with IBM and AWS, our FPC partnership is an opportunity to learn from the leaders of traditional finance and to bring the spirit pace of private sector problem-solving to their new era of public banking.
Finally, Cypherium is also a member of the world’s leading blockchain research group, the Initiative for Cryptocurrencies and Contracts (IC3). Affiliated with Cornell University, this partnership ensures that Cypherium stay true to its tech-first mandate. We are a company that prides itself on delivering what enterprises and individuals need to better their lives and their futures. At IC3, we are able to compare and collaborate with the best minds in the DLT space, challenging ourselves not to stop at what will work, but to test the limits of what is possible.
Currencies themselves are a social tool, a form of community relation. A partnership-driven approach is the only way to ensure that CBDCs reach their fullest potential.
