The world’s seven main central banks and the Bank for International Settlements (BIS) are considering creating a digital currency. Because of this, they have reached a consensus on the fundamental aspects of their broadcast.
All this, according to a report by the Bank for International Settlements (in English Bank for International Settlements, or BIS), on October 9, which establishes that cryptocurrencies will coexist with cash. Obviously, whose use has been reduced by the Coronavirus.
In particular, the BIS report has been carried out by the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank (ECB). In addition, the Federal Reserve (FED), the Swedish Sveriges Riksbank, the Swiss National Bank and the Bank for International Settlements (BIS).
This idea emerged in 2019, when Mark Carney, governor of the BOE, urged a review of the global financial system.
As a curious fact, all of them will continue to investigate the feasibility of creating their own digital currency. But, they do not promise to issue it.
The People’s Bank of China (PBOC) is not in this group. This country already has a pilot project underway with its official digital currency (DC / EP). As a consequence, they want to make the scope of the yuan the same as the dollar.
Central Banks and their own digital currency
These banks have reacted due to the emergence of rivals such as Libra, Facebook’s digital currency project. Incidentally, which Visa, PayPal or MasterCard withdrew their support. Or to the proliferation of other cryptocurrencies.
In this regard, Christine Lagarde, President of the ECB, stated: “Although technology changes the way we pay. Central banks have an obligation to safeguard people’s trust in our money«.
Furthermore, he added:
Central banks must complement their national efforts. With close cooperation to guide the exploration of digital currencies. ‘
In the report, central banks agree that their digital currencies should help you meet your monetary policy goals. And not harm monetary or financial stability. Also, they must drive innovation and efficiency.
Jon Cunliffe, Deputy Governor of the Bank of England, said: “This report is a real step forward for this group of central banks. Definitely, we need to identify the key features, for a practicable central bank digital currency system«.
Its main characteristics would be:
- Resistant to cyber attacks.
- Accompanied by a system capable of processing a very high number of payments per second.
- Practical and easy to use.
- Available at very little or no cost to end users.
- Backed by appropriate standards and clear legal frameworks.
Very important, Benoit Coeuré, co-chair of the working group, said: “A design that provides these characteristics. You can encourage stronger, more efficient, inclusive and innovative payments«.
It should be noted that according to the report, the main challenges would be:
- That can be used to stimulate aggregate demand. Through direct transfers to the public.
- Identify recipients and their accounts.
Bank of Japan (BoJ) and its announcement after the report
Precisely, the Bank of Japan (BoJ), announced after the publication of the central banks report. Their plans to issue a digital currency by 2021.
Specifically, the ads are online. With the policy of the new Japanese Prime Minister Yoshihide Suga. Obviously, it promotes digitization.
In its exploration, the BoJ says that a first experimental phase will be done on the functioning of the digital currency. Generally, during this period it will be issued and distributed as of April 2021.
To conclude, the issuance and design of a digital currency by a central bank is a sovereign decision of each jurisdiction. What do you think about this union of central banks? Leave us your opinion in the comment box.
I say goodbye with this phrase from Helen Keller: «We can do little alone. Together we can do a lot«.