SWIFT CEO Gottfried Leibbrandt has spoken to the Financer, sharing his thoughts on cryptotechnologies as such, their current and future influence on the banking sector, and on the bitcoin digital currency in particular.

Leibbrandt described himself as a keen bitcoin user who often urges others to get a wallet and try it to understand the essence of the technology. He called bitcoin "a fantastic user experience", adding however, that from the scalability point of view bitcoin does not seem yet to be able to replace traditional currencies.

“The whole outstanding value of bitcoin is just a couple of billion dollars and the daily volume, if I’m not mistaken, is in the order of $50-100 million. The volumes that are going through the global financial system are about 100,000 times that number. That’s the order of magnitude of what happens today, and I’m not sure I can see that being replaced by Bitcoin on a meaningful scale. That’s not to say that it won’t be there in its niche," said Mr. Leibbrandt.

SWIFT CEO added that, though believed to be frictionless by many, in reality bitcoin is not 100% free of friction, as the mining costs paid out to bitcoin miners amount to about 1% of the total transaction volume, which is “not negligible”.

Describing the effect the bitcoin digital currency and blockchain technology are able to produce, and are already producing, on banking sector, Mr. Leibbrandt said that banks will hardly be displaced by the digital technologies, but rather will adapt to the changes and transform themselves. And still he admitted seeing it all as a challenge:

“Certainly I see all of us being challenged. Absolutely. I think these things have the potential to fundamentally change how we do things with money and banks have to worry about how to absorb and leverage it. That applies to SWIFT as well,” he said.

Nevertheless, Mr. Leibbrand believes that banks have some things in their favour, including infrastructure and the experience of working with high value exchange, which includes managing credit and market risks, capitalisation and regulatory framework. He noted that the default risks, which are usually faced by intermediaries such as banks, in peer-to-peer lending are encountered by lenders themselves. The peer-to-peer technology thus, in the view of Mr. Leibbrandt, can be absorbed by banks, them additionally insuring peer-to-peer lenders from the default risks.

Likewise, he believes, the blockchain technology should also get absorbed by banks:

“We’re looking at the blockchain technology, keeping a very close eye on it. If there is a way to improve the service we provide to the banks with that new technology, then we will use it. We are absolutely on it.”

When asked whether he sees any reason in claiming that taxation and regulation cannot be applicable to digital currencies, Mr. Leibbrandt said he could not agree at all:

“I think that’s complete baloney. People said you couldn’t tax things on the internet, because the internet is global. I think governments have made pretty good progress in how to tax internet commerce. You can tax it in the country of the receiver or in the country of the sender of the goods – or both... I firmly believe that where there is value exchange, it will be regulated and it will be taxed. That’s a whole framework we’ve had in place for thousands of years, and I don’t see that being turned on its head by this technology. I think everybody realizes that regulation and taxation is needed.”

He added that he doubted the concept of money without government as such, saying that history has seen very few examples of such concept's success.

Summarizing his stance, Mr. Leibbrandt repeated once again that the technology does affect, and will grow to affect more, the banking sector, and will continue to be a challenge difficult to overestimate.

As Coinfox reported earlier, huge banks are now getting more and more involved in researching and adapting cryptotechnologies, laboratories being opened worldwide, partnerships signed and investments made into the sector.

Maria Rudina