The Bank for International Settlements (BIS) and a group of leading-economy central banks has issued a report outlining what they believe the key principles of a central bank digital currency (CBDC) should be – but yet again went to great pains to sit on the fence when it comes to the matter of actually issuing a digital currency.
The BIS said that it worked with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, Sveriges Riksbank (Sweden’s central bank) and the Swiss National Bank on the paper.
But those hoping for ground-breaking revelations will be dismayed to read that among the “key” recommendations for CBDC issuance was a commitment to notions like “promoting innovation and efficiency” and “supporting wider policy objectives” while “doing no harm to monetary and financial stability.”
However, significantly, the report claimed that CBDCs should be issued in two-tier systems that did not marginalize cash or seek to replace it.
“Coexistence with cash and other types of money in a flexible and innovative payment system” is a “key principle,” the report’s authors stated.
They also identified a number of what it called “core features” of a possible CBDC, stating that a digital currency should:
- Be resilient and secure to maintain operational integrity
- Be convenient and available at very low or no cost to end-users
- Be underpinned by appropriate standards and a clear legal framework
- Have an appropriate role for the private sector, as well as promoting competition and innovation
The BIS and the group of central banks said that they would continue their work and would “further explore” the “practical implications” of the core features it identified and look into the “practical issues and challenges for cross-border transfer of domestic CBDC.”
Many of the aforementioned central banks are engaged in fast-moving CBDC research, with digital currency pilots popping up like mushrooms in a forest after a rainstorm in the wake of China’s breakneck-paced digital yuan progress.
However, the report was also full to the brim with non-commital disclaimers and caveats, including the following,
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