bis official urges central

BIS official urges central banks to start CBDCs amid crypto boom

In a speech at a financial forum on September 10, veteran policymaker Benoît Coeuré has encouraged monetary authorities to act more quickly as the crypto market continues to grow. To compete with the payment platforms in the private sector, he stated that central banks must expedite the development of central bank digital currencies (CBDCs) or risk being overhauled by cryptocurrencies. 

‘The time has passed for central banks to get going. We should roll up our sleeves and accelerate our work on the nitty-gritty of CBDC design. CBDCs will take years to be rolled out, while stablecoins and crypto assets are already here. This makes it even more urgent to start,’ Coeuré said.

He also advised central banks and regulators to consider their roles once the CBDCs fully emerges in the banking industry, as well as the ramifications of the design of a new financial ecosystem. 

‘Will the new players complement or crowd out commercial banks? Should central banks open accounts to these new players, and under which regulatory conditions? We urgently need to ask ourselves these kinds of questions about the future,’ he mentioned. 

Currently leading the research on CBDCs for the Bank for International Settlements (BIS), Benoît Coeuré believes that CBDCs’ main objective is to maintain the positive attributes of the system while still embracing innovations.

Moreover, he explained that BIS Innovation Hub is presently assisting central banks in developing CBDCs.

‘To build a CBDC for the public, a central bank needs to understand what they need, and work closely with other authorities. The BIS Innovation Hub is helping central banks. We already have six CBDC-related proofs of concept and prototypes being developed in our centres, and more to come,’ he emphasized in his speech.

Today, 81 central banks are starting to explore their own digital currencies. Among these financial institutions, five countries have fully launched their CBDCs including the Bahamas, Saint Kitts and Nevis, Antigua and Barbuda, Saint Lucia and Grenada. 

On the other hand, China is also set to release the digital version of the renminbi and will be implemented as part of the government’s investigation on centralised digital currencies. 

In contrast, the US central bank remains to be furthest behind as it has not yet decided whether to push through with a digital version of the US dollar despite being ‘a very high priority’ for the Federal Reserve System. However, Federal Reserve Chairman Jerome Powell further emphasized, ‘It’s way more important to get it right than it is to get it fast’. 

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