Recently the central banks and the Bank for International Settlements (BIS) have published a central bank digital currency (CBDC) report laying out key requirements for CBDC, saying that core features should include resilience, availability at low or no cost, appropriate standards and clear legal framework, and an appropriate role for the private sector.
The rise in cashless payments since lockdowns to fight the pandemic has accelerated how technology is changing forms of money, according to Bank of England (BoE) Deputy Governor. Central banks began looking closely at digital currencies after Facebook announced in 2019 its yet-to-be-launched digital token Libra that would be backed by a mixture of major currencies and government debt.
Central banks need to keep up to avoid the private sector plugging payments gaps in unsuitable ways, the chair of a BIS committee on payments Jon Cunliffe said.
China is already piloting a digital renminbi, with the PBOC saying it would boost the yuan’s reach in a world currently dominated by the dollar. China was seeking to win a first-mover advantage in building its own digital currency, warning it was ‘something we should be afraid of’, Japan’s top financial diplomat, Kenji Okamura, said.
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