Standard Chartered CEO Bill Winters highlighted some of the downsides from the potential mass adoption of central bank digital currencies, including a poor customer experience. 

Authorities worldwide are making varying levels of progress toward the development of central bank digital currencies (CBDC), as part of the broader trend of leveraging distributed ledger technology in finance. Mainland China is in a relatively advanced stage, having announced its digital yuan ambitions in 2019 and following up with multiple trials. Hong Kong announced in September it would launch its own e-HKD pilot scheme in the fourth quarter this year.

«The CBDCs, some would argue, are a response to private sector stablecoins [and] the fear that monetary policy was going to be wrenched away from central banks and that the money flows would be less visible to central banks,» said Standard Chartered CEO Bill Winters during a panel at Hong Kong’s Global Financial Leaders’ Investment Summit yesterday.

«That, in and of itself, is a motivation for CBDCs to exist but it’s probably not a good motivation for a CBDC to thrive.»

Customer Experience

According to Winters, the financial services industry has spent an enormous amount of resources focused on developing solutions that can embed themselves into the digital economy and, ultimately, create a positive experience for users – a stark contrast compared to central banks.

«As much I love central bankers, they don’t wake up and go to bed at night thinking about the customer experience,» Winters said, highlighting financial stability, monetary policy and economic growth as higher priorities.

«Vexing Questions»

In addition to the lack of focus on user experience, Winters also highlighted other use cases that are possible but may need consideration as they run counter to some fundamental features in the financial system. 

«There are surveillance use cases, there are [use cases for] fighting financial crimes which run counter to some other objectives that we’ve got around free flow of information and markets and transparency,» he explained. «These are extremely vexing questions that will be tackled by some central banks, not all.»

Displacing Banks

And end-users aside, mass issuance of CBDCs also has the potential to disrupt lenders. 

«We know that through regulations, CBDCs can not just displace stablecoins – they can displace banks. I don’t think [central banks] want to be in the credit intermediation business in a major way,» Winters said. «I hope there will be some guard rails on the amount of CBDC that is in issuance because those are deposits that will not be in banks. That’s the nature of a CBDC.»