The Bankers' Bookshelf: Going Cashless with CBDC
Do not pine or weep for cash.
See the Links below for the podcast and full YouTube video!
It’s always a pleasure to talk with my dear friend Paolo Sironi!
In this episode of Paolo’s Bankers’ Bookshelf podcast we talk about how CBDCs are poised to change our world.
To keep it relevant for bankers, we examine the opportunities and threats CBDCs pose to banks and the profound societal changes they could bring.
Now, to show how cashless China is and what a good friend Paolo is, the last time we were in China together in 2020, Paolo had a disaster; he couldn’t get his WeChat Pay to work with a foreign card! I graciously paid for everything with WeChat Pay, and he paid me back in cash from an ATM!
👉TRUTHBOMBS (selected transcript highlights)
6:27 Some people, some listeners, may be saying China isn't relevant, it's too far away, it's too different. My answer to these people who are thinking that is that no, China is a decade ahead of the West in payments and shows the West’s future.
7:18 The biggest trend that we have to be watching on a global level is the trend for real-time payments. Now, note I didn't just say CBDC, which is what people might expect. I also love India’s UPI and Brazil’s PIX account-to-account (A2A) payment systems. They are fundamentally changing our world.
9:07 CBDC does something that only cryptocurrency has done before and that is to disintermediate the banking system to a degree
12:44 I'm going to preface this by saying there are people out there who hear that CBDCs are a solution looking for a problem, to which the reply is that the problem has been found long ago if you're willing to acknowledge it. The problem is that the United States pays annually 2.3% of its entire GDP to Banks for payment services, and the European Union pays 1.4%
15:47 One of the things that should stick out in European banker's Minds is that 60 plus percent of European payments are handled by American-controlled payment systems Visa and MasterCard, and there is no European native cash transfer system.
16:15 What you see is the ECB repeating over and over again, and its very interesting to watch people seem to like it doesn't seem to make the news, but it should when the ECB says we need our own cash transfer system or digital payment transfer system so that we cannot be shut down we cannot be sanctioned we cannot have our payments disrupted, and you know this is the fallout of the massive sanctioning events on Russia because of the war and because of sanctions imposed across the planet right now
19:27 Privacy is a very interesting discussion. People don't understand how little privacy you have now, and I will state upfront that the digital Euro, the digital RMB, the digital rupee in India, and the digital real in Brazil all will have higher degrees of privacy than the credit cards and plastic debit cards that you are currently using.
23:22 If you're a banker listening to this and running the card division, you should look at what happened to card usage in China when free payment was available. Card use plummeted, but there are still a lot of cards out there and plenty of payments.
24:12 The good news for the banking system is, of course, that CBDC will not destabilize or break the bank. It will not cause it to fail. The bad thing is that payment system Revenue, particularly that tied to Interchange fees from debit and credit cards, will be reduced
25:59 There's a lot of good that will happen for banks because of CBDC on the commercial side of the business that will certainly offset any of the losses from cards
32:00 So look, if you were to look at the desk behind me in the drawer, there are two wads of cash. One is in US Dollars, and the other is a wad of cash in RMB because you never know when you're going to need money all right, the answer is that we will have less cash in the future I think that people should have the option to use cash particularly the elderly or those who are not digitally inclined
32:30 Do not pine or weep for cash. Remember, China serves as an example of this; the crime statistics once China went cashless went down tremendously. People don't carry cash, which means there's no reason to rob you or stores.
LINKS
Apple:
Spotify:
Website: Provoke.fm
Medium: Breaking Banks Europe
YouTube:
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