Breaking: Seven central banks publish a report of policy objectives for any CBDCs
|- A CBDC ( central bank digital currency) is a digital form of fiat money.
- The Bank for International Settlements (BIS) and seven other banks have compiled a report with all the necessary principles for available CBDCs to help central banks meet the requirements.
The report was compiled by the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, Sveriges Riksbank, the Swiss National Bank, and the BIS.
There are several reasons that have motivated central banks to write the report, like the ability to continue providing access to central bank money or increased payments diversity. The report also states that encouraging financial inclusion, improving cross-border payments, or supporting public privacy were also points in favor of CBDCs.
Of course, risks are also mentioned, most notable with financial stability risks :
A central bank’s decision to embark on issuing a CBDC will require assessing the value of opportunities to further pursue its objectives, balanced against any risks. The most valuable opportunities that encourage issuance will be where a CBDC can support a central bank’s public policy objectives. Other opportunities abound (eg reducing illegal activity, facilitating fiscal transfers or enabling “programmable money”), yet unless these have a bearing on a central bank’s objectives, they will be secondary considerations.
Japan ditches the idea of developing its own cryptocurrency
Nonetheless, Japan has moved away from developing its own CBDC due to stability risks. It seems that the Bank of Japan doesn't believe cash in circulation will drop enough to speed up the launch of a new type of money.
If private digital money will not substitute for the functions of cash sufficiently, the Bank might provide general-purpose CBDC as a payment instrument alongside cash. As long as there is public demand for cash, the Bank will stay committed to supplying it, the regulator explained.
China, on the other hand, seems to be moving into full support of cryptocurrencies, airdropping 10 million DECP to 50,000 residents and 3,389 merchants in the Luohu District.
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