Central banks pursue development of central currency co-operating to share information on their experiences via group working.
The Bank of England last week announced the setting up of a group of central banks with the Bank for International Settlements (BIS) to jointly research central bank digital currencies (CBDC). The group will include the central banks of Canada, the United Kingdom, Japan, the European Union, Sweden and Switzerland.
The Bank of England’s press release published on 21st January 2020 states that the institutions that make up this group will share their experience with other group members as they progress their studies cases of potential use for CBDCs in each of their respective home jurisdictions. The press release goes on to state:
“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 co-ordinate with the relevant institutions and forums – in particular, the Financial “Stability Board and the Committee on Payments and Market Infrastructures (CPMI).”
The research group will be co-chaired by head of the BIS Innovation Hub Benoît Cœuré and Jon Cunliffe, a Deputy Governor of the Bank of England and chair of the Committee on Payments and Market Infrastructure. Also included in the group will be senior representatives from the participating central banks and the BIS.
Central banks worldwide exploring digital currency
A number of central banks worldwide have already begun to research, pilot and actively develop CBDCs alongside various other forms of digital currencies. The president of the European Central Bank, Christine Lagarde, has already openly stated her support of the institution’s efforts in developing a CBDC. In her first address as President of the European Central Bank, Lagarde said that there is urgent demand for fast and low-cost payments, and that the ECB should take a leading position, rather than remaining observers of a changing world.
“The digital currency – we have set up a taskforce and we will accelerate the effort of this taskforce, drawing on the resources of the entire Eurosystem, meaning the national central banks that already participate in that research and that have already committed to the project in terms of experimentation, pilots here and there. So harnessing on all those experiments that have taken place and all the research that has already been put into this effort, together with the work that has been done here also….My personal conviction is that given the developments we’re seeing — not so much in the Bitcoin segment — but in the stablecoin projects — and we only know of one at the moment, but there are others being explored, and underway at the moment, we better be ahead of the curve, if that happens, because there is clearly a demand out there that we have to respond to.”
Meanwhile, the People’s Bank of China is leaping forward and heading the rest of the world in terms of developing its own CBDC and recently announced that it has completed the top-layer design and joint testing of the digital yuan.