Obi Emetarom, co-founder and CEO of pan-African payment infrastructure company AppZone, thinks they can. But for that to happen, issues around regulatory compliance and interoperability would have to be addressed first.
“The big thing fiat has, that [stablecoins] don’t have, is the ability to track who owns what [and] what has moved, and [this helps] to mitigate against money laundering, illicit financing, among others,” Emetarom told PYMNTS in an interview.
For CBDCs, it’s more of an interoperability issue, he pointed out, adding that a lot of central bank digital currencies tend to function in silos, which ultimately affects adoption.
Fixing those two hurdles, the issue of compliance when it comes to stablecoins and interoperability for CBDCs would make regulated digital currencies a “major game changer” for payments in the emerging markets, Emetarom said.
Beyond their ‘game changing’ attribute, he said, stablecoins and CBDCs will replace fiat and end up being the payment currency of the future. For instance, the fact that fiat or paper money sits in physical vaults introduces huge costs and reconciliation and settlement issues into the process of transferring money “because that physical aspect does not move as quickly and cheaply as the digital component.”
On the safety front, blockchain also has an edge over paper money because records are stored on multiple devices across the world and cannot be easily destroyed or tampered with.
“You can’t burn 1,000 servers sitting in different locations. That has brought a sort of permanence and confidence to recording value and information on this new digital medium,” he explained.
It’s also a question of transparency and the ability to see how money moves with blockchain, which in turn helps to monitor money laundering and illicit financial flows and makes regulatory initiatives like automated tax regimes much easier to implement.
“So, when you look at all this and stack them against each other, you see that [stablecoins and CBDCs are] the next phase in the evolution of money and financial services,” Emetarom said.