The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Sveriges Riksbank and the Swiss National Bank, together with the Bank for International Settlements (BIS), have created a group to share experiences as they assess the potential cases for central bank digital currency (CBDC) in their home jurisdictions.
The group will assess CBDC use cases; economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies. It will closely coordinate with the relevant institutions and forums – in particular, the Financial Stability Board and the Committee on Payments and Market Infrastructures (CPMI).
The group will be co-chaired by Benoît Cœuré, Head of the BIS Innovation Hub, and Jon Cunliffe, Deputy Governor of the Bank of England and Chair of the CPMI. It will include senior representatives of the participating institutions.
The BIS set up the hub last June to encourage international collaboration on innovative financial technology within the central banking community. The Swiss National Bank later signed an operational agreement with the BIS to open the hub in the country to research a blockchain-based digital currency.
At least two central banks of the group – Sveriges Riksbank and the European Central Bank – are already developing their sovereign digital currencies. The Bank of Canada and the Swiss National Bank have also been researching CBDCs for a while.
The BoE’s and the Bank of Japan’s participation in the group appears to be a new development. In August, BoE’s governor Mark Carney said a central bank-supported digital currency could replace the US dollar as the global hedge currency.
The European Central Bank’s president Christine Lagarde has also remained optimistic about CBDCs. Earlier this month, Lagarde said CBDCs may provide citizens with a means of exchange in the event “physical cash eventually declines.”
At least 18 central banks are currently developing digital currencies, according to research, this does not include central banks that have announced they are thinking about issuing digital currencies or researching them.
China’s central bank appears to be ahead of other central banks in the CBDC race. The People’s Bank of China (PBoC) recently announced it has completed the “top-level” design of its digital currency. The PBoC has been researching and developing its digital currency since 2014. The much-anticipated digital yuan will be first distributed to commercial banks and then users and businesses can register digital wallets with these commercial banks.
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