Central bank digital currencies (CBDCs) will hopefully replace physical cash and become fully digital, a central banker tells the World Economic Forum (WEF).
Speaking at the WEF’s Special Meeting on Global Collaboration, Growth and Energy Development on Sunday, Central Bank of Bahrain governor Khalid Humaidan told the panel “Open Forum: The Digital Currencies’ Opportunity in the Middle East” that one of the goals of CBDC was to replace cash, at least in Bahrain, and to go “one hundred percent digital.”
Humaidan likened physical cash as being an antiquated “analogue” technology and that CBDC was the digital solution that would hopefully replace cash.
“We’re probably going to stop calling it central bank digital currency; it’s going to be a digital form of the cash, and at some point in time hopefully we will be able to be one hundred percent digital”
Bahrain Central Bank Governor Khalid Humaidan, World Economic Forum, April 2024
“I thank this panel and this opportunity. It forced me to refine my thoughts and opinions where I’m at a place comfortably now that I’m ready to verbalize what I think about CBDC,” said Humaidan.
“If we think cash is the analogue and digital currency is the form of digital — CBDC is the digital form of cash — today, clearly we’re in a hybrid situation; we’re using both.
“We know in the past when it comes to cash, central bankers were very much in control with all aspects of cash, and now we’re comfortable to the point where the private sector plays a big role in the printing of the cash, in the distribution of the cash, and with the private sector we use interest rates to manage the supply of cash.
“The same thing is likely to happen with CBDC. Yes, the central bank will have a role, but at some point in time — the same way we don’t call it ‘central bank cash’ — we’re probably going to stop calling it central bank digital currency.
“It’s going to be a digital form of the cash, and at some point in time hopefully we will be able to be one hundred percent digital,” he added.
When asked how he would convince people that CBDC would be a trusted medium of exchange, Bahrain’s central bank governor said that people were already used to it and that COVID made the digital transformation “necessary” and “something of a requirement” that had “very little resistance.”
“There’s less and less use of cash […] I think the transition to fully digital is not going to be a stretch […] People are used to it, people have engaged in it and certain circumstances did help. Its adoption rates increased because of COVID […] There is very little resistance”
Bahrain Central Bank Governor Khalid Humaidan, World Economic Forum, April 2024
“Right now, many of our payments are digital. The truth is, I said that we’re in a hybrid model; there’s less and less use of cash,” said Humaidan.
“I think from predominantly digital with a little physical, I think the transition to fully digital is not going to be a stretch.
“People are used to it, people have engaged in it and certain circumstances did help. Its adoption rates increased because of COVID.
“This is where contactless started to become something of a necessity, something of safety, something of a requirement, and because of that there is very little resistance; trust is already there,” he added.
“A digital currency will never be as anonymous and as protecting of privacy in many respects as cash, which is why cash will always be around”
European Central Bank President Christine Lagarde, BIS, March 2023
Meanwhile, European Central Bank president Christine Lagarde has been going around the world telling people that the digital euro CBDC would not eliminate cash, and that cash would always be an option.
Speaking at the Bank for International Settlements (BIS) Innovation Summit in March 2023, Lagarde said that a digital currency will never be as anonymous as cash, and for that reason, cash will always be around.
“Is it [digital euro] going to be as private as cash? No,” she said.
“A digital currency will never be as anonymous and as protecting of privacy in many respects as cash, which is why cash will always be around.
“If people want to use cash in some countries or in some transactions, cash should be available.
“A digital currency is an alternative, is another means of payment and will not provide exactly the same level of privacy and anonymity as cash, but will be pretty close in terms of complete neutrality in relation to the data,” she added.
A WEF Agenda blog post from September, 2017 that lists the “gradual obsolescence of paper currency” as being “characteristic of a well-designed CBDC.”
“We are at the cusp of physical currency essentially disappearing […] You could have a potentially […] darker world where the government decides that units of central bank money can be used to purchase some things, but not other things that it deems less desirable like say ammunition, or drugs, or pornography, or something of the sort“
Eswar Prasad, WEF Annual Meeting of the New Champions, June 2023
Last year at the WEF’s 14th Annual Meeting of the New Champions, aka “Summer Davos,” in Tianjing, China, Cornell University professor Eswar Prasad said that “we are at the cusp of physical currency essentially disappearing,” and that programmable CBDCs could take us to either a better or much darker place.
“If you think about the benefits of digital money, there are huge potential gains,” said Prasad, adding, “It’s not just about digital forms of digital currency; you can have programmability — units of central bank currency with expiry dates.
“You could have […] a potentially better — or some people might say a darker world — where the government decides that units of central bank money can be used to purchase some things, but not other things that it deems less desirable like say ammunition, or drugs, or pornography, or something of the sort, and that is very powerful in terms of the use of a CBDC, and I think also extremely dangerous to central banks.”
The WEF’s Special Meeting on Global Collaboration, Growth and Energy Development took place from April 27-29 in Riyadh, Saudi Arabia.
“Saudi Arabia’s absolute monarchy restricts almost all political rights and civil liberties,” according to DC-based NGO Freedom House.
In the kingdom, “No officials at the national level are elected,” and “the regime relies on pervasive surveillance, the criminalization of dissent, appeals to sectarianism and ethnicity, and public spending supported by oil revenues to maintain power.”
Image source: Still from WEF panel on YouTube
