Allaire also believes that the world is headed toward a system of cheap, instant monetary transactions with traditional, fiat money – regardless of which countries happen to launch digital fiat money. Moreover, he thinks that this will be a radical change in the way that payment systems, the monetary system and economic interaction at large will work.
Jeremy Allaire, the CEO of blockchain-based, crypto-inclusive money transfer company Circle, said that the firm has long held that major fiat currencies would eventually be tokenized.
Significant digital currencies
In an interview on Aug. 21 on the podcast Global Coin Research, Allaire said that Circle has thought for years that sovereign currencies would eventually be digitized. He stated:
“When we got started with Circle back in 2013, I think our belief has been that there will be significant non-sovereign digital currencies that grow in use and that will be attractive to people for a wide variety of reasons, and Bitcoin obviously being the most noteworthy. But we also have believed that the major reserve currencies of the world, the major trade currencies of the world, would become digital currencies.”
A radical change
Allaire explained that he does not think digital currencies will simply be tokenized via blockchain, but otherwise operate the same as they do now. Instead, he predicts that global money tokens, backed by baskets of reserve currencies, will emerge and become the preferred monetary model.
However, he projects this as the “mid to long-term outcome” of countries’ current endeavors with tokenization. Allaire also believes there are some detrimental factors preventing immediate progress, including issues such as nationalism, trade conflict or even a resurgence of so-dubbed economic mercantilism.
National banks move to issue digital currencies
As previously reported by Cointelegraph, a number of central banks are looking to issue digital currencies. Rwanda’s central bank is one of the latest to indicate its interest, and it joins a long list of other countries including Uruguay, the Bahamas, China, Sweden, Ukraine and the Eastern Caribbean Currency Union.
China in particular appears to be approaching a digital currency launch quickly, with some sources saying that Facebook’s Libra has provided inspiration for further testing.
Circle CEO: No One in the World Is Any Closer to CBDCs than China
China has the most progressive approach to central bank digital currencies (CBDCs) to date, according to Circle CEO Jeremy Allaire.
The only global bank to really care
Allaire said that China’s central bank has the most advanced thinking about CBDCs in an interview aired on Phoenix Chinese News on Sept. 9.
According to Allaire, the People’s Bank of China (PBoC) is the only global central bank that is working on the CBDC from a research and development perspective. The Circle CEO emphasized that the PBoC appears to be the most significant central bank to be launching a digital currency commercially, adding that there is no one else in the world who is anywhere close.
Allaire further expressed excitement about the potential interaction of the PBoC’s CBDC with stablecoins pegged to the United States dollar. He said:
“For us, we’ve been working for multiple years on the US Dollar coin that’s been growing very fast. And I think that we’re excited to see how things like the Chinese central bank digital currency could eventually interact or be traded with things like US Dollar coin.”
China’s CBDC to bypass the Western banking system
Allaire’s positive statements about the PBoC initiatives in the CBDC space come amid the launch of a new Chinese yuan-pegged stablecoin, CNHT, by major stablecoin firm Tether. The company officially announced the news on Sept. 9, explaining that the new stablecoin is pegged to the offshore yuan, which will purportedly make it free of the monetary policies of Beijing.
In some sense, Allaire was reiterating his bullish stance on the PBoC, after previously claiming that a digital currency version of China’s national currency renminbi can bypass the Western banking system.
Meanwhile, according to unconfirmed reports, the People’s Bank of China is reportedly setting up its first-ever CBDC with online retail giant Alibaba, Internet giant Tencent, five banking organizations and one unknown entity, as reported in late August. Moreover, on Aug. 20, a local report stated the PBoC was almost ready to launch its state-backed digital currency, which may have been influenced by the unveiling of Facebook’s planned cryptocurrency Libra in June 2019.