update 27 October 2021

Six Central Banks Embark on Research Concerning CBDCs

A recent news release dated 21st of January has suggested that there is a formation of a new partnership between 6 banks, including the central bank platforms of England, Europe, Japan, Switzerland, and Sweden, together with the BIS. The designation of this new alliance is to explore the central bank’s digital currencies

Researching in this context involves looking deep into the various applications, use cases, functions, technical and economical design, and interoperability across the border. After exploring the different countries will make decisions on if and how to implement the use of CBDCs. 

The alliance will work closely with expert institutions with relevant authorities like the CPIM and the Financial Stability Board in exploring all the angles of CBDCs. Moreover, they will share knowledge collected on new technologies and how best to implement the CBDC use. 

Benoit Coure, the BIS innovation Hub’s head, and John Cunliffe, the Bank of England deputy governor and chair of CPIM, are chosen to co-chair the operations. Major personnel and representatives from each of the central banks and institutions involved in this deal will be part of the team conducting the research. 

However, the aforementioned banks are not the only ones conducting research or even designing digital currencies and possible CBDC formation. Other countries like Venezuela, China, and India have in the past shown interest in this technology and currency. 

As many other banks are trying to do research, China is already implementing by testing the top layer design of the digital version of the Yuan. As the world hedges into a fully technological world, China could just be the first country to have a successful digital sovereign currency. 

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A recent report shows that the European Central Bank’s president Christine Lagarde supports the ECB’s plan for having a CBDC. She went on to praise the ECB’s effort for being a leader for providing reliable and fast transactions at low costs.