Banks are becoming increasingly open to innovations from the blockchain world, Raiffeisen ‘actively explores potential’

Collaborations between traditional financial institutions and new DeFi (decentralized finance) concepts, as well as the introduction of central bank digital currencies (CBDC), were the topics of the Web3 Tales conference held in Zagreb’s Lauba, gathering domestic and international experts to discuss the future of finance, blockchain technology, and decentralized systems.

At the panel ‘Banks and DeFi: Why do traditional banks see value in decentralized concepts?’, Vid Hribar from Raiffeisen Bank discussed the growing interest of traditional banks in DeFi technologies. Although it may seem at first glance that these two spheres are distant, banks are beginning to recognize the potential of smart contracts and blockchain technologies.

A key question at the panel was what are the current steps banks are taking towards adopting DeFi technology? Hribar emphasized that the Austrian bank is actively exploring the potential of blockchain technology. Specifically, Raiffeisen Bank has established its own blockchain hub, focused on research, strategy, and the development of pilot projects. One of the key projects is a collaboration with three other banks on the development of a euro stablecoin project.

Hribar posed a crucial dilemma: is DeFi a threat or an opportunity for traditional banks? According to him, Raiffeisen Bank sees DeFi as an opportunity, not as an opposition or competition to banks. He pointed out that DeFi offers significantly greater operational efficiency compared to traditional banks and opens the door to innovative financial products such as yield farming and staking, which the bank is closely monitoring.

Custodial wallets and the tokenization of financial instruments have been identified as areas where Raiffeisen sees the most potential. Hribar believes that since banks traditionally act as custodians and providers of financial infrastructure, they have a natural role in providing these services within the DeFi ecosystem. However, since banks are strongly oriented towards regulated systems, Hribar emphasized the importance of regulatory frameworks. MiCA (Markets in Crypto Assets) regulation, which is still developing, has been recognized as a good first step towards establishing clearer rules.

In conclusion, Hribar emphasized the need for the entire DeFi industry to mature, address compliance challenges, lack of transparency, as well as technical and security issues.

Advantages of CBDCs

At the second panel ‘Why are central banks considering digital currencies and what’s next?’, Mike Alonso, head of tokenization at the Bank for International Settlements (BIS), discussed the importance of central bank digital currencies (CBDC). The panel provided insight into the reasons why central banks are seriously considering the introduction of their own digital currencies, as well as the role of commercial banks in that process.

Alonso highlighted that CBDCs could bring increased financial inclusivity and efficiency in payment systems, but it is also important to consider potential challenges related to privacy and data security.

He also mentioned three experimental projects that include: Project Guardian, Project Mariana, and Project Forge, which are at various stages of experimenting with CBDCs. These projects explore how central banks can use blockchain technology to enhance the security and speed of transactions and reduce costs.

According to Alonso, CBDCs bring significant advantages for all participants in the financial ecosystem:

• Central banks – can ensure greater system stability, oversight, and control of cash flows.
• Commercial banks – benefit from increased liquidity and reduced risk, allowing them to offer better services to their clients.
• End users – receive faster, cheaper, and more efficient financial services, improving the overall customer experience.

It is interesting to see how traditional banks are becoming increasingly open to innovations from the blockchain world and how DeFi is slowly becoming part of the mainstream financial discourse. On the other hand, central bank digital currencies represent a step towards the digital transformation of money, but it remains to be seen how the regulatory framework will develop.