July 27, 2023

Exploring Purpose Bound Money: Innovative Use Cases for Central Bank Digital Currencies in Fintech | Startuprad.io E 390

40 minutes

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Executive Summary

In this episode, our guest Kimmo discusses the concept and potential of Central Bank Digital Currencies (CBDCs) in part two of our series. We highlight the need for government control of the monetary system and the risks posed by private currencies. We explore various use cases and mechanisms that can encourage the adoption and success of CBDCs, including simplifying cross-border transactions and optimizing liquidity. We also dive into the idea of purpose-bound money and the importance of simplicity and convenience in utilizing CBDCs. As always we emphasize the role of entrepreneurs in developing new use cases and analyzing consumer behavior to drive CBDC adoption. Analytical approaches and network analysis play a crucial role in this process.

The Potential of Programmable Money: “I think these new use cases and thinking about new use cases of programmable money, for example, is definitely something that I think there’ll be loads of different opportunities for companies to start to provide new ideas, new services to people.” — Kimmo Soramäki

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The Importance of CBDC for Financial Stability: “But the crypto showed that, hey. Actually, you can run this in a distributed multi multi-asset international environment relatively smoothly. So I think that was an enabler for the conversation.” — Kimmo Soramäki

Three Key Developments in CBDC in The Last Year

We had our last update with Kimmo almost a year ago and since there have been three important developments:

1) CBDC does not have to be on blockchain anymore, the discussion has shifted to other cryptographic means.

2) The conversation has also shifted to tokenization for bank deposits and inter-bank lending for Central Bank Digital Currencies

3) CBDCs have been launched in other countries, especially in China. We do not see a large-scale adoption there yet, since there is a real use case missing.

Central Bank Digital Currencies: “In many countries, the driver has, of course, also been, like, in the Euro system or in China, the sovereign control of money. So if you think of emperors, they always wanted to put their heads on the coins. So, like, that’s been a goal of the government or an objective for a long time to have control of the monetary system.” — Kimmo Soramäki

Questions Discussed In This Interview:

How successful do you think the speaker's experiment of living a cashless life has been so far?

Do you believe that Central Bank Digital Currencies (CBDCs) will become widely adopted in the future? Why or why not?

What are some potential advantages of using CBDCs over traditional payment methods like cash or credit cards?

How do you think purpose-bound money could simplify consumers' lives and improve payment processes?

What are some potential use cases for CBDCs that have not yet been explored by entrepreneurs in the fintech industry?

How can CBDCs help drive financial inclusion, especially in countries with large unbanked populations?

What role do you think consumer behavior and payment networks play in the adoption of CBDCs?

How might the integration of distributed ledger technology (DLT) or other cryptographic methods impact the success of CBDCs?

What are some potential challenges that central banks and governments may face in implementing CBDCs?

How can network analysis and modeling of consumer behavior help guide the successful adoption of CBDCs?

The Future of Central Bank Digital Currency: “Even if there was a little bit of...

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