Bank for International Settlements Issue Positive CBDC Update

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The Bank of International Settlements (BIS), a global central bank for central banks, has issued a beta report on digital payments, notably the Central Bank Digital Currencies (CBDC).

BIS urges central banks to adopt CBDC, according to its 29-page report.

“One option at the political opportunities frontier is to issue CBDCs, which could amount to a sea change,” the report reads.

According to the BIS, the number of positive speeches discussing the benefits of CBDC (retail and wholesale) has been rising since the beginning of 2020. That is one of the reasons for the recent bullish CBDC outlook.

A further driving force was the COVID-19 crisis, the report says. When countries locked up, many individuals and companies favored keeping cash and shifting their company online. Although holding cash was a precautionary measure, many people later started to fear the virus being transmitted from cash transactions.
Facebook’s Libra is a further main driver. While its white paper failed to pass crypto-regulations, its creators worked hard to fix it. Benoît Coeuré, an economic adviser to the BIS, has recently crushed speculation for CBDC about an arms race between the US and China.

A Congressional Fintech Task Force is currently working to add the digital dollar as a financial instrument to the US economy. There were also other calls for the CBDC in America.

CBDCs and Blockchain
As many others have observed, blockchain technology doesn’t automatically rely on a CBDC. The fears discussed in the BIS report, though, underline a scenario of long-standing use. That is, the significance of reproducing some of the finest cash components:

“Technically, a successful retail CBDC would need to provide a resilient and inclusive digital complement to physical cash. As such, a CBDC must have all the features and more that make cash so attractive. The basic elements are trust in the issuing entity, legal tender status, guaranteed real-time finality, and wide availability.”