DATA SECURITY BANKING TECHNOLOGY
CBDC, DLT, and cryptocurrency – the three formidable forces defining future digital economies Rajashekara V. Maiya Vice President and Head, Business Consulting Group, Infosys Finacle, spotlights on the potential role of CBDCs in the digital transformation journeys of financial institutions and the many opportunities for banks
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Rajashekara V. Maiya, Vice President and Head, Business Consulting Group, Infosys Finacle
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bout 20,000 people in St Vincent and the Grenadines were evacuated when the island’s volcano La Soufrière erupted in April. Fortunately, their rebuilding and recovery efforts received timely support through DCash – a digital currency that people could use for payments and other banking transactions through a smart device. Only a month earlier, the Eastern Caribbean Central Bank (ECCB) had launched the world’s first retail central bank digital currency (CBDC) within a currency union. It has since extended its blockchainbased DCash in 5 member countries including St Vincent and the Grenadines. Although the idea of digital cash was first mooted in the 1980s, digital
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currency as a concept has gained wider acceptance in the past few years. In future, it might well lead to the next major disruption in financial systems, worldwide. As the IMF reports in its latest paper, central banks in a hundred countries are now exploring the idea of Central Bank Digital Currencies (CBDCs) for general public use. While CBDCs would serve as digital banknotes in the digital economies of the future, their increased acceptance is closely linked with the rise of distributed ledger technologies (DLT) and cryptocurrency in financial circles. Here we examine their impact and potential role in the digital transformation journeys of financial institutions.
The security net of DLT Recently, IBM reinforced its commitment to test and validate Hyperledger – an open-source project aimed at developing blockchain-based distributed ledgers – at a population scale. Such contributions by business leaders are reinforcing the case for DLT. In the past, hasty or badly planned digitalization ser ved to heighten concerns of cybersecurity for financial institutions. Today, for a bank undertaking
