COTI Co-Founder Insights on CBDCs
Shahaf Bar-Geffen, the co-founder of the blockchain firm COTI, anticipates that the ongoing debates over Central Bank Digital Currencies (CBDCs) will eventually fade as prominent financial institutions start to adopt the technology and effective designs are developed.
Global Perspectives on CBDCs
During an interview, Bar-Geffen discussed the diverse global perspectives on CBDCs, with some countries showing support while others, notably the United States, remain hesitant. He underlined the transformative potential of CBDCs, stating that they could enable rapid, low-cost cross-border transactions, enhancing the efficiency of current financial services to meet modern demands.
“CBDCs empower central banks and governments to provide their citizens with speedy, affordable cross-border payment solutions, aligning financial services with today’s requirements,” Bar-Geffen explained.
Emphasizing privacy as a critical component, he referred to COTI’s collaboration with the Bank of Israel on a project last year to ensure user data protection as part of the Digital Shekel initiative, asserting that privacy measures must be integral to any CBDC strategy.
Cautious Adoption and Government Perspectives
Across the globe, while several nations are actively pursuing the development of CBDCs, others, particularly the U.S. government, display a cautious stance. The previous Trump administration notably issued an executive directive that effectively prohibited federal agencies from developing CBDCs. Bar-Geffen indicated that the slow pace of adaptation in traditional banking sectors is due to the complex nature of large-scale technological shifts, as many CBDC initiatives remain at the research and development stage.
However, he noted that the European Central Bank (ECB) has indicated the near completion of its testing phase, with plans to introduce a CBDC by year’s end.
Goals and Motivations Behind CBDCs
Many governments justify the pursuit of CBDCs by citing goals of promoting financial inclusion and improving payment efficiency. Conversely, some analysts argue that the underlying motive for these digital currencies may be to counter the ascendancy of decentralized cryptocurrencies like Bitcoin. In his insights for Bitcoin.com News, Bar-Geffen highlighted how CBDCs differ from cryptocurrencies through features such as a limited supply of tokens and higher centralization levels.
He does acknowledge that CBDCs may challenge the dominance of stablecoins in the market, stating,
“CBDCs aren’t aimed at competing with cryptocurrencies like Bitcoin; they’re more likely to find themselves in rivalry with stablecoins.”
Integration with DeFi and Future Predictions
Bar-Geffen expressed skepticism about the prospect of CBDCs integrating with decentralized finance (DeFi) platforms or Web3 technologies, suggesting that stablecoins will continue to act as conduits between traditional fiat currencies and the cryptocurrency landscape. He dismissed assertions from some vocal cryptocurrency advocates that the adoption of CBDCs represents a governmental attempt to exert control over the cryptocurrency realm.
In relation to COTI’s recent initiative, the Africa Tokenization Council, which aims to bolster blockchain adoption across Africa and the Middle East, Bar-Geffen hopes to foster cooperation between local authorities and international blockchain specialists. He believes such collaborations can facilitate efficient decision-making, ensure financing, and expedite the implementation of blockchain technologies.
Looking Ahead
Looking forward, Bar-Geffen predicts that within five years, CBDCs could become widely utilized in various regions, with their risks and rewards largely dependent on the foundational work being conducted today.
“We are proactively engaged with this opportunity, ensuring that we are ready to seize it as it develops,”
he stated confidently.
