Interview with Helie d’Hautefort about adoption trends for CBDC (Central Bank Digital Currency) in Switzerland and globally.

Inspired by Ilias’s post entitled Switzerland Is Calling, I spoke with Helie d’Hautefort, Founder of  Reserve Currency Solutions, about the possibility of a Central Bank Digital Currency (CBDC) in Switzerland and likely adoption trends for CBDC.

Central Bank Digital Currencies sit at the intersection of Legacy Finance and Cryptocurrencies. In that guise they get little love from people who are firmly in one camp or another:

  • People in the Legacy Finance camp tend to look at anything that has any relation to Bitcoin, Blockchain and  Cryptocurrency with suspicion.
  • People in the Cryptocurrency camp look at anything coming out of Legacy Finance with suspicion.

Pragmatic entrepreneurs look for practical solutions that solve real problems. Those  entrepreneurs need to understand both Legacy Finance and Cryptocurrencies. Helie d’Hautefort really understands both worlds, which is why I wanted to talk to him about the trends driving Central Bank Digital Currency in Switzerland and elsewhere.

Helie has been working in Switzerland for the last 20 years (in Forex and currency investment management). So he also understands why, how and when  Switzerland could adopt a  Central Bank Digital Currency.

  • Q 1: Is Switzerland likely to be an early adopter of a  Central Bank Digital Currency?

Switzerland is a crypto friendly jurisdiction and has an avowed aim to become the world’s first “crypto-nation”. As Illias pointed out “More than 1,000 crypto startups have made Switzerland their home. The leading crypto projects, like Ethereum, Bitmain, Shapeshift, Tezos, DFinity, Cardano and many others are based in Zug.”  The Swiss people trust the Swiss Franc and so are  likely to trust a Swiss Franc CBDC.

Yet Helie gave us a reality check, pointing out that Switzerland takes democracy very seriously and getting democratic consensus takes a long time. So Helie suggested that CBDC adoption in Switzerland is likely to start with institutional not retail use cases. Pressed to come up with institutional use cases for CBDC, Helie offered two:

  • Correspondent banking settlements. Today this means SWIFT and Nostro/Vostro accounts which is 1970s era technology.


  • Getting Government stimulus money quicker to citizens (aka  “helicopter money”) via banks to improve velocity (ie make stimulus more effective).

Helie mentioned 20 central banks looking seriously at CBDC. My thesis is that once one does it we will see a lot of followers quite quickly. Which country will be first? One candidate is China.

  • Q 2: What is the impact of Facebook Libra on Central Bank Digital Currencies?

Facebook’s Libra announcement in June 2019 forced regulators around the world to take a closer look at digital currencies.

Helie pointed out that Libra V2 is more likely to be tied to a single currency than to a basket. It is unlikely to be the basket of currencies initially envisaged. The impact of Libra on CBDC is that their clout and the threat they pose to Government monopoly on currencies has speeded up CBDC adoption and the Libra wallet may encourage millions to store CBDC and other cryptocurrencies and not just Libra.

  • Q 3: What is the likely impact of Central Bank Digital Currencies on how will do cross border payments and foreign exchange?

As BOE Governor Andrew Bailey rightly pointed out recently : “Cross border payments can still take as long as 10 days to transfer money to different jurisdictions and the transaction cost can sometimes be 10% of the value of the transfer.”

CBDCs (and more generally stablecoins) can reduce friction in cross border payments by increasing the speed , lowering the cost while significantly improving the customer experience . The risk is that CBDCs could “uberize” (or let’s say disintermediate) one of the most profitable business of  the banking sector that might impact the cost of other basic banking services . Technology opened many opportunities to radically change  the cross border payments eco-system. We think the future of  payments will see a coexistence between the existing banking infrastructure (enhanced due to clients pressure), privately issued stablecoins and CDBC’s ; in the future digital technology will become the norm . The remaining question is what will be the role and responsability of each actor and how will they interact ?

Helie pointed to the massive market opportunity in the $700 billion remittances market with its antiquated technology and high fees. Facebook is likely to implement in classic  remittances  corridors such as USA to Mexico, Brazil, or India.

One Fintech making inroads into cross border payments is Revolut. Helie pointed out that while Revolut’s growth from 10k to 10 users is impressive, they are still a rounding error compared to Facebook.

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