Daily Management Review

Digital Currency Creation To Be Explored By A Group Of Six Central Banks


Digital Currency Creation To Be Explored By A Group Of Six Central Banks
Six major central banks of the world will not be sharing their knowledge and experiences for making a realistic assessment of the possibility of launching and issuing central bank digital currency (CBDC) in their respective countries.
The six central banks have formed a group which comprises of The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Sveriges Riksbank and the Swiss National Bank. Also included in the group is the Bank for International Settlements (BIS). The mandate for the group include making assessment of the possible usability of CBDC, the best choices in terms of economic, functional and technical designs which includes cross-border interoperability and how they can share knowledge on emerging technologies.
In recent years, a number of companies in the private sector have attempted to launch their own digital currencies such as the proposed Libra crypto currency from Facebook, which, according to the regulators, pose a threat to financial stability and monetary policy. This has prompted the central banks to act in this manner.
BenoƮt Coeure, head of the BIS Innovation Hub, and Jon Cunliffe, deputy governor of the Bank of England and chair of the Committee on Payments and Market Infrastructures will co-chair the group wherein the participating institutions will be represented by senior representatives.
The possible launch of Facebook's proposed crypto currency Libra was a "wake up call" for central banks, former ECB board member Coeure had said in September. A call to the public authorities to become more active and seek out the possibilities of the development of CBDCs was also given by Coeure.
"Much in this spirit, the ECB and the Bank of Japan have already joined forces to examine the possible use of distributed ledger technology in financial market infrastructures," he said at the time. "The next natural step would be for global central banks to join forces and jointly investigate the feasibility of CBDCs based on common technical standards."