The CBDC topic just keeps piling up the articles on a daily basis. This one appears in coingeek and is a summary of a speech made by the head of BIS’ innovation hub program, who believes that central banks need to be ratcheting up their work on CBDCs so as to better compete with decentralized currency and stablecoins. We just mentioned the latest BIS collaborative effort with Nordic central banks in a posting yesterday, so this speech is no revelation of course, just reinforces a BIS position that has been gaining momentum during 2021.
‘In his speech at the Eurofi Financial Forum, Benoît Cœuré acknowledged that the world of finance is shifting drastically, with mobile and contactless payments becoming part of our daily lives due to the pandemic. Globally, central banks are striving to keep up, and CBDCs are their best shot at staying ahead of the times, the banker believes….Benoît believes that central bank-issued money is superior due to factors such as its safety, finality, liquidity, and integrity. However, even with its advantages, the central bank-issued money, including CBDCs, faces a litany of competition. This includes big techs (such as the embattled Facebook’s Diem), stablecoin issuers, and DeFi, the banker believes.’
This position is in stark contrast to activities in the U.S., where a relatively conservative approach is being taken to the development of a CBDC. There is a non-profit and private effort underway through the Digital Dollar Foundation, primarily funded by Accenture, which has targeted five separate pilot projects for 2021, although we have seen no published results as of yet. The commentary we have been hearing from the Federal Reserve suggest that there is no rush to be first, but to be correct instead. The Boston Fed and MIT have been collaborating on research for a CBDC, called Project Hamilton, but there has been no release of findings to date. In the meantime, it seems the rest of the globe pushes ahead.
‘Benoît believes that urgency is key if central banks are going to compete with their upcoming rivals.“…the time has passed for central banks to get going. We should roll up our sleeves and accelerate our work on the nitty-gritty of CBDC design. CBDCs will take years to be rolled out, while stablecoins and cryptoassets are already here. This makes it even more urgent to start,” he stated….The BIS is working with different central banks on their CBDC projects. They include from its home state in Switzerland where the central bank is working on Project Helvetia for domestic CBDC uses and Project Jura, a wholesale CBDC between Switzerland and France. BIS is also working with Hong Kong on Project Aurum and with South Africa and Australia on Project Dunbar.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
