Six leading banks belonging to the Central Bank group have formed an alliance to work together to assess the potential for central bank digital currency (CBDC) in their respective jurisdictions. These banks include the Bank of England, Bank of Canada, Bank of Japan, European Central Bank, Sveriges Riksbank (Sweden), Swiss National Bank as well as the Bank for International Settlements (BIS).
All these major institutions have prior expertise in investigating the likely advantages and detriments of digital currency. The CBDC working group will facilitate collaboration in the area of digital currency development and encourage the sharing of previous research and trials conducted.
A press release by the Bank of England added:
“The group will assess CBDC use cases; economic, functional, and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies. It will closely coordinate with the relevant institutions and forums – in particular, the Financial Stability Board and the Committee on Payments and Market Infrastructures (CPMI).”
The group will be led by the Head of BIS’ Innovation Hub, Benoît Cœuré, and the Deputy Governor of the Bank of England and chair of the Committee on Payments and Market Infrastructure, Jon Cunliffe. It will comprise of several other senior associates working on digital currencies from the member banking institutions.
The group is a result of efforts by Christine Lagarde, who has pushed the European Central Bank to dedicate significant resources to studying the merits of CBDC. Lagarde has emphasized that banks must strive to stay ahead of the curve when it comes to cryptocurrencies to emerge at the forefront of the swiftly shifting financial atmosphere.
While the creation of the group demonstrates that central banks are moving forward in their research on the costs and benefits of digital currencies at the global level, some key exclusions from the list cannot be ignored. Despite having significant expertise in the space, banks such as the People’s Bank of China, the Monetary Authority of Singapore, and the Bank of Thailand remain conspicuously absent from the group.