Central bank digital currencies (CBDCs) will form an important part of the future of financial services, according to Société Générale CEO Frédéric Oudéa.
Speaking at Sibos 2021, Oudéa says that while CBDCs may not play a major role for the next five years or so, they will come to more prominence in 10 years.
“There is a strong willingness, whether it’s in China, the US, or Europe, to consider this kind of development,” he says.
“At the end of the day, it might be more efficient than, and might replace, cash.”
Oudéa says CBDCs are a natural part of the evolution of technology, but questions remain over how they will function in practice, and at what stage banks are involved.
“I think the European Central Bank has been very clear in saying we need to, and want to, preserve the role of banks as intermediaries.”
Oudéa adds it is important the financial services sector gets involved in the first processes, to help shape “what would be an efficient system”.
He sees CBDCs worked into a process which preserves “all the benefits that banks provide to their economies”, but which also incorporate innovative technologies and systems.
He cites the world of payments as a place ripe for disruption, though specificity is needed. “It’s very different between small payments and larger transactions.
“For small payments you have initiatives like the European Payments Initiative trying to create a more integrated European system with cheap costs and better efficiency.
“Regarding larger transactions, it is probably more about being able to establish standards.” Oudéa says it is here that distributed ledger technology (DLT) could be beneficial.
“Regulated blockchain technology could modernise mechanisms and processes which still rely too much on paper and manual control.”