Davos Day 3 Shows Conflicting Visions for the Metaverse, CBDCs

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    DAVOS, Switzerland – Conversations about blockchain on the third day of the Davos conference showed that the architects of the metaverse are still trying to figure out what exactly it is, and regulators are pushing back on central bank digital currencies (CBDCs). ) could do more harm than good to the global economy.

    The World Economic Forum (WEF) released two reports on the Metaverse on Wednesday. To encompass the broad and sometimes ambiguous concept of the Metaverse, the report defines it as “an immersive, interoperable, and synchronous digital world that will change the way we interact, work, and play.” Masu.

    Despite all the fuss about the Metaverse due to Facebook's transformation into a Meta Platform in 2021, the world has yet to witness or experience anything tangible.

    “It's an evolving concept. One that doesn't yet have a standard definition,” Kathie Lee, WEF's head of media, entertainment and sports, said at a press conference Wednesday.

    Huda Al Hashimi, UAE Deputy Cabinet Minister for Strategic Affairs, said at the same event that the open-ended question of how the metaverse should be regulated also requires extensive testing.

    “Also, regulators will act more like referees than gatekeepers, and their codes of conduct will actually take precedence over policy development,” Al Hashimi said. Ta.

    Later Wednesday, the panel heard two very different visions of the Metaverse.

    One of those comes from Meta, whose chief product officer Chris Cox said he believes “someday that platform will be as important as smartphones.”

    Cox compared the Metaverse he's building to Instagram, Meta's other social media property, which is “focused on providing tools to creators and builders.” That will include not only startups and stores, but also “self-contained spaces that are often provided by large corporations,” he said.

    But the challenge is moving from one ecosystem to another while it's easy to move online from, say, Wikipedia to Google Maps without losing coherence or connectivity, he said. . “Some of the things that don't exist in the metaverse yet are hyperlinks,” Cox said.

    read more: Davos 2023: Cryptocurrencies are falling, but not disappearing

    For fellow panelist Neal Stephenson, an influential science fiction writer, it was clear what kind of model was needed.

    “That won’t happen unless we create an open system similar to the early Internet. [where] Anyone who is interested can figure out the sharing protocols,” said Stevenson, who coined the term “metaverse” in his 1992 novel “Snow Crash.” “The current image that people have of Facebook is that it's a very centralized, top-down organization.”

    (Trying not to show any hard feelings, Mr. Cox invited his fellow panelists to have coffee after the panel meeting, but Mr. Stevenson politely declined.)

    Quote of the day: “This is Davos without legs. It’s so good.” – Nicholas Thompson, CEO of The Atlantic, connects the WEF Metaverse to the Global Collaboration Village.

    Advantages and disadvantages of virtual fiat currencies

    Making different digital ecosystems interact is another theme for central bankers, who joined financial infrastructure chiefs inside the Congress Center to discuss central bank digital currencies.

    It was pointed out during the discussion that interoperability, as it is known in technical terms, comes with many challenges, especially that central banks do not always trust each other. South African Central Bank Governor Lesetya Kganyago told a panel that the obstacles to applying CBDCs are often governance and legal inconsistencies rather than technology.

    The panelists' comments suggested that there is still a long way to go to profit from crypto fiat currencies and that there is a lot of potential for it to actually harm the global economy.

    “When we come up with a new innovation, we make sure it's scalable and avoids the potential costs of owning a digital island,” said Javier Pérez Tasso, CEO of SWIFT, a messaging service used for interbank transfers. It’s important to be able to do it.” Tasso said central bank digital currencies could lead to further fragmentation instead of unifying payment systems.

    There have been limited successful trials of CBDCs for both interbank and individual payments, but there are limits. Amir Yaron, Governor of the Central Bank of Israel, spoke passionately about the trials he is conducting to enable cross-border retail payments. sweden and norway.

    But he acknowledged that the issue of anti-money laundering checks, which is one of the main reasons why cross-border payments using correspondent banking are actually so slow and expensive, has not yet been resolved. There are also questions about who will build the international hub and whether it will be a group of central banks. international monetary fund or an award-winning private company.

    Liebe Mostley of clearinghouse Euroclear also participated in the transaction. Attempt to tokenize government bonds France's central bank has warned that such experiments with instant payments come with costs, including potential liquidity losses, which could lead to transaction delays, especially if the transition to the new system is not smooth. did. “The key is interoperability,” Mostley said. “If we don't get that right, I think migration will simply be impossible.”

    read more: Non-cryptographic applications of blockchain take center stage on second day of Davos


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