- B Vrettos and M Bacina
Digital currencies cruise into the Davos World Economic Forum discussion
Since 1971 the World Economic Forum has considered a broad range of matters impacting the global public interest. It does this by bringing together public and private sectors through political, business, cultural and other leaders of society to advance global governance.
This year the Davos agenda asserts that:
The time to rebuild trust and to make crucial choices is fast approaching as the need to reset priorities and the urgency to reform systems grow stronger around the world.
In accordance with this aim is the two-part session on "Resetting Digital Currencies". The sessions seek to address COVID-19's push from cash to non-cash payments, recognising the increase of 8% of non-cash payments in the euro area in 2020, and what considerations in relation to policies, practices and partnerships must be considered to yield the opportunities digital currencies may bring.
With the backdrop of other key initiatives of the World Economic Forum including the Digital Currency Governance Consortium and Reimagining Regulation: Pathways to Digital Currency it is apparent that digital currencies are high on the Forum's radar. Specifically, the reimagining regulation initiative states that:
Preparation is key. Without a proactive outlook, governments run the risk of widening existing gaps, incentivizing monopolistic behaviour, and falling behind on their own innovation agendas.
The two-part session hosted a range of government, research, and private actors to discuss the opportunities of digital currencies. The first session highlights the necessity for clear terminology and language surrounding digital currencies as Her Majesty Queen Máxima of the Netherlands observed that whether a currency is designed as a medium of exchange or store of value impacts the effect of the currency greatly.
However, Andrew Bailey, Governor of the Bank of England, expressed that the regulatory approach for digital currencies didn't need to change from traditional regulation being centered on public interest. Bailey said that three areas of public interest to regulate digital currencies were to:
ensure stability of value;
tackle financial crime; and
present an appropriate balance with privacy and access to personal information.
This session demonstrates the way that digital currencies are arriving on the mainstream stage as a crucial consideration in developing economies. The first part of the session is publicly available online here.