BIS, central banks publish CBDC report laying out key requirements

The Bank for International Settlements (BIS) together with a group of seven central banks have published a central bank digital currency (CBDC) report laying out key requirements for CBDC.

Thus, the report identifies the foundational principles necessary for any publicly available CBDCs to help central banks meet their public policy objectives. The paper was compiled by the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, Sveriges Riksbank, the Swiss National Bank, and the BIS.

It highlights three key principles for a CBDC:

• Coexistence with cash and other types of money in a flexible and innovative payment system;
• Any introduction should support wider policy objectives and do no harm to monetary and financial stability;
• Features should promote innovation and efficiency.

Based on these principles, the group has identified the core features of any future CBDC system, which must be resilient and secure to maintain operational integrity, convenient and available at very low or no cost to end users, underpinned by appropriate standards and a clear legal framework, and have an appropriate role for the private sector, as well as promoting competition and innovation.

Further development of CBDCs requires a commitment to practical policy analysis and applied technical experimentation. Future activities will include exploring other open questions around CBDCs and the challenges of cross-border payments, as well as continuing outreach domestically and with other central banks to foster informed dialogue on key issues.