A group of central banks from some of the biggest global economies have released a joint report assessing the feasibility of central bank digital currencies. The seven partnered with the Bank for International Settlements (BIS) on the report which seeks to offer insight into what is needed for a central bank to roll out a CBDC.
The European Central Bank, the Bank of Canada, the Federal Reserve, the Swiss National Bank, Sweden’s Sveriges Riksbank, the Bank of England and the Bank of Japan all worked together to compile and publish the report. They are seeking to identify the principles necessary for any CBDC, to help other central banks around the world to meet their public policy objectives.
Titled “Central bank digital currencies: foundational principles and core features,” the report highlighted three key principles that a central bank must adhere to as it develops a CBDC. They are a CBDC’s ability to coexist with cash and other types of money, promotion of innovation and efficiency and support for wider policy objectives while doing no harm to monetary and financial stability.
Sir Jon Cunliffe, the deputy governor of the Bank of England and the group’s co-chair remarked:
“This report is a real step forward for this group of central banks in agreeing the common principles and identifying the key features we believe would be needed for a workable CBDC system. As well as helping central banks to meet their public policy objectives, the report provides a useful framework for how central banks provide money and support payment systems in an ever-evolving digital world.”
Cunliffe believes that the report will be the foundation of an international consensus which will help central banks globally as they “explore the case and design for CBDCs in our own jurisdictions.”
The report summarized the features of any future CBDC system as resilient and secure, convenient and cost-effective, underpinned by a clear legal framework and promoting competition and innovation.
The group of 7 will continue working together to explore all the opportunities and tackle all the challenges that come with CBDCs, they stated. They also intend to reach out to other central banks to foster dialogue on the key issues they face in their CBDC exploration.
The group however clarified that it was not recommending CBDCs to central banks.
“This report is not about if or when to issue a CBDC. Central banks will make that decision for their jurisdictions,” the report stated. It also revealed that none of the seven contributing members had reached a decision on whether or not to issue a CBDC.
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