What happened at the Global Blockchain Business Council summit? A playful debate happened at the blockchain summit where panelists discussed the future payment systems and the emergence of central bank digital currencies (CBDCs).
What was it about? Mastercard’s CEO Michael Miebach, when asked whether the international payment system SWIFT will still exist in five years’ time, responded “no,” eliciting a collective gasp from the crowd.
Give me some context: In light of the West’s recent sanctions against Russia, countries that either claim neutrality to the Russia-Ukraine war or that are Russia-friendly are witnessing the unfavorable implications of using SWFT.
What does it mean? It means you’d better get along with UN-allied nations, or else the West can choose to exclude you from the dollar-heavy SWIFT, disrupting your capacity to make cross-border payments. Why shouldn’t these countries wish for an alternative?
What does this have to do with CBDCs? Suppose CBDCs pave the way for future cross-border payments, rendering the commercial banking system somewhat irrelevant.
Our gold thought nugget: Supposing a CBDC system were to thrive, it might also mean that citizens of nations implementing CBDCs as a primary means of payments and banking may be stripped of their transactional privacy and freedom of consumption (especially if your central bank decides on implementing negative interest rates to get you to stop saving and start spending). How close are we to this dystopian “Big Brother” reality?
DAVOS, Switzerland — Mastercard (MA) CEO Michael Miebach made people gasp. He answered “no” when asked if SWIFT, the current interbank messaging system that allows for cross-border payments, will exist in five years' time.
He smiled during his answer but the crowd seemingly took his answer seriously.
Miebach spoke on a panel adjacent to the World Economic Forum’s annual (WEF) summit hosted by the Global Blockchain Business Council (GBBC). The panel discussed the future of cross-border payments and the potential of CBDCs in the financial system.
“If you can get a payment with all the data attached that you need as a company [...] the cost savings of that in addition to a payment cost that is lowered, and the overall productivity boost, we can expect if we do this well, that’s the real goal here,” Miebach said on the panel.
The conference officially kicked off Tuesday, with crypto being mentioned frequently in panels adjacent to the conference. The subject is bolstered by the strong presence of crypto companies on promenade, the main street leading up to the Congress, where official WEF panels take place.
Read more: At Davos, Crypto Is No Longer on the Outside
Also part of Tuesday’s panel was Jennifer Lassiter, executive director of the Digital Dollar Project; Yuval Rooz, the CEO of Digital Asset; David Treat, a director at Accenture and co-founder of the Digital Dollar Project; and Jon Frost, senior economist at the Bank of International Settlements. They all said SWIFT will still exist in five years.
Miebach was the only one to say that maybe in the near future SWIFT might not be the dominant system to transfer money across continents. Both Lassiter and Rooz also seemed to think SWIFT may one day be replaced, but said that five years won’t likely be enough time.
A Mastercard spokesperson downplayed the impact of Miebach’s response in a statement sent via email after the panel.
“Let us clarify the intent of the on-stage comment as it’s not as simple as a yes or no answer. Michael was simply reinforcing what SWIFT has previously said – their operations continue to evolve. Its current form will not be the same in the future. They are adding more functionality and moving past just being a messaging system,” the spokesperson said.
But attendees at WEF are nonetheless paying attention. One guest asked a panel during a discussion on centralization about Miebach’s comments, while another attendee was overheard asking about it at the Congress Centre.
Originally published on Yahoo! Finance.