- Bank for International Settlements (BIS) and the Swiss central bank ventures into CBDC.
- The action will consider whether digital currencies can work alongside present payment structures.
- BIS and several central banks released a document on the proposed legal codes of CBDC.
A Chinese news outlet, The Paper, reveals that the Bank for International Settlements (BIS) is liaising with the Swiss central bank to experiment with Central Bank Digital Currencies (CBDC).
Benoit Coeure, head of the BIS Innovation Hub, has disclosed that the scheme will commence before the close of 2020. The measure will consider whether digital currencies can function alongside established payment structures. Coeure disclosed that the Innovation Centre is at present, performing a try-out in Singapore, Switzerland and Hong Kong, and intends to stretch the strategy to other European countries.
This action comes after the BIS and many central banks released a statement outlining the fundamental rules for digital currencies. The report entitled Central Bank Digital Currencies: Foundational Principles and Core Features mention that the release of digital currencies should not damage financial security. The paper examines the practicality of CBDC without confirming an issuance.
BIS in the past
BIS piloting CBDC comes as a surprise due to its general manager, Agustin Carstens, speaking unfavourably of digital currencies in May 2019. While addressing his audience at the Central Bank of Ireland, he made known that central banks do not see the value of releasing digital currencies.
The subject of CBDC has escalated in recent years. The debates have centred on its access, level of anonymity and, operational availability. Central banks have customarily restricted banks and other financial institutions from accessing digital account forms of central bank money. Cash, on the other hand, is easily accessible. This method has benefited the public and financial industry and makes it difficult to modify the existing economic structure. Nonetheless, BIS and the Swiss central bank’s movement sets digital currencies in good stead for the future.