Banks face liquidity and control tests in digital-currency race

Finextra and CGI hosted a recent webinar where industry experts examined the operational challenges banks face when offering central bank digital currencies (CBDCs), stablecoins and tokenised deposits. The discussion focused on infrastructure, settlement, liquidity and governance, and included Sean Devaney, vice-president for market strategy — payments at CGI; Naveen Mallela, global head of payments at Standard Chartered; with Scott Hamilton as moderator.

Panelists compared the technical and process differences between CBDCs, stablecoins and tokenised deposits. CBDC implementation depends on central bank platforms and policy choices. Stablecoins require issuer controls, reserve management and market infrastructure linked to legal frameworks. Tokenised deposits require banks to map digital tokens to existing balance-sheet liabilities and integrate them with back-office systems.

Onboarding and customer controls remained a core topic. The webinar outlined that banks are likely to keep customer-facing know-your-customer procedures, onboarding and compliance controls. Other lifecycle steps such as token issuance, ledger hosting or settlement could run on systems outside a bank’s direct control, creating points of connection between banks and external operators.

Speakers highlighted liquidity and settlement as operational challenges. Real-time payment rails and tokenised money increase intraday liquidity needs and require clearer settlement finality. The minting and burning of tokens create ongoing operational costs and funding demands. Banks and issuers must manage reserve balances, collateral arrangements and potential capital or liquidity charges. Panelists flagged common underestimates, including technology integration, continuous reconciliation across ledgers and the cost of meeting multiple jurisdictional requirements.

Control and oversight issues were discussed in relation to third-party networks. When settlement or token custody occurs off-bank networks, banks can lose direct visibility of transaction timing and flows. The webinar described arrangements ranging from full custody and settlement on bank systems to a model where banks act as customer-facing on-ramps while third parties handle issuance and settlement. Delegation introduces operational risks tied to smart-contract code, node security and the need for real-time reconciliation.

Regulation and governance featured in the discussion. Panelists noted that jurisdictions are moving at different speeds and that regulatory frameworks for stablecoins and tokenised assets are still under development. They referenced renewed regulatory attention in 2024, including the U.S. GENIUS Act, as a factor ramping market interest. Banks are considering pilots and partnerships while rules are finalised and need internal guardrails, cross-border compliance processes and clear accountability for outsourced activities.

The webinar outlined specific service opportunities for banks. These include custody for tokenised assets, liquidity provision on new rails, programmable deposit products that use token standards, and using tokenised instruments to streamline treasury and cross-border flows. Panelists recommended phased pilots that preserve customer control and compliance as a way to test offerings without taking on full operational responsibility immediately.

Panelists advised banks to map which functions they will retain, quantify hidden and recurring costs such as mint/burn operations and liquidity buffers, and design governance frameworks aligned with the mix of in-house and outsourced services. The session focused on operational and governance choices banks must make as digital-money systems move toward wider implementation.