Central Banks Considering Creating Their Own Digital Currencies

In a news release issued on the 21st January, the Central Bank Group announce they will be assessing potential cases for Central Bank Digital Currencies.

“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 experience 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 new seven-member working group is not the first group of central bankers working together on distributed ledger technology (DLT). In 2016, the ECB and the Bank of Japan worked together to release collaborative research reports investigating how DLT can be integrated into the global financial infrastructure.

It is thought that the rapid development of discussions has stemmed from geopolitical reasons like catching up with China, who’s digital Yuan is in the final stages and Russia who is in the final stages of launching the e-Ruble, it also may have stemmed from making it easier to enforce controversial policies such as negative interest rates. (https://bravenewcoin.com/insights/central-banks-call-for-digital-currency-as-china-powers-ahead). The increased pace of development has lead to a sharing of resources, helping authorities deploy their own digital currencies. And it’s not only countries leading the way in digital currency, Facebook announced in June 2019 it would be introducing Libra, a digital coin complete with an ecosystem and a wallet – the release date is yet to be finalized.

The promise of the central bank digital currency (CBDC) is that a digital currency could make it easier for cross-boarder movement, improving traceability, fighting corruption and money laundering.