As a preview to its next annual report, on 24 June the Bank for International Settlements (BIS) published a special chapter in that Bitcoin Up report on digital payments, especially the Central Bank’s digital currencies, a topic that has attracted enormous interest in recent months.
The report encourages central banks to treat CBDCs as their future, saying:
„One option at the frontier of policy opportunity is the issuance of CBDCs, which could bring about a radical change“.
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A recent change in favour of CBDCs
The BIS found that there had been a significant upward shift in interest in CDBs since the beginning of this year, as measured by the speeches that referred to them positively or negatively.
The COVID-19 pandemic has influenced this change, the report says, citing the increase in precautionary cash reserves, trade moving online, and the fact that „public concern about viral transmission of cash has increased.
Given the quantitative mitigation measures implemented worldwide to stimulate economies in crisis, the report’s assertion that „today the role of central banks is as important as ever, if not more so“ seems particularly apt.
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Libra, China and global competition
Facebook pound is shaping up to be a great opportunity this turn. Stablecoin fell into the hands of the regulators immediately after their White Paper came out, a relationship that the Libra Association has struggled to repair in recent months.
During a press conference, Benoît Coeuré, economic advisor to the BIS, confirmed that „Libra, as we say, was the wake-up call of the global community.
Coeuré, however, denied seeing evidence of what some call an arms race for a CBDC, especially between China and the US.
„I don’t think there is a race, really,“ Coeuré said. „At this stage, we just want to learn from what others are doing.“
Hyun Song Shin, head of the BIS Innovation Center, also emphasized the uses of CBDCs domestically rather than internationally:
„It is mainly about the safety and efficiency of domestic payments, as well as financial inclusion. I think the international dimension has a lot of coverage, but at the moment it differs from what we know in terms of design features and actual uses.