As the world financial system gets digitized, central banks are tirelessly working on developing and issuing their Central Bank Digital Currency (CBDC) in the near future.
China is already on the forefront of the game, whereby it has launched its digital Renminbi ahead of other countries. However, due to the scale of CBDCs complexity, countries are working together on how to offer the best form of digital currency.
BIS and the Seven Central Banks on CBDC
According to media outlet Cointelegraph, a group of seven global central banks led by Japan central bank, United States Federal Reserve, and the Bank of England, has partnered with Bank for International Settlements (BIS) to do a research on the best form of CBDC. Hereby releasing a joint report on how to build and issue effective CBDCs.
However, the report noted that it is not on when central banks will issue CBDC but a brainstorm on how to develop the best form of digital currencies.
“This report is not about if or when to issue a CBDC. Central banks will make that decision for their jurisdictions (in consultation with governments and stakeholders). None of the central banks contributing to this report have reached a decision on whether or not to issue a CBDC,” the report indicated.
The United States government agencies and its policymakers have been heavily criticized for not putting in place measures that foster cryptocurrency adoption and also sluggish in the CBDC development. However, putting in mind that China is rolling out a digital Yuan to replace the dollar as the world reserve currency, the Americans are prompted to act diligently not to miss the important CBDC features.
Notably, China is rushing to roll out its digital Yuan and develop a system that will allow global blockchain interoperable. As a result, if China succeeds in its mission, it will have a huge control in the global monetary system.
Key Features to Be Included
The joint report noted three major features of expected CBDCs that will make them effective and not a recipe for market disruption.
“A central bank should not compromise monetary or financial stability by issuing a CBDC; (ii) a CBDC would need to coexist with and complement existing forms of money; and (iii) a CBDC should promote innovation and efficiency,” the report noted.
In addition, the report indicated that a CBDC should be easily convertible, convenient to all, possess an unmatched security system, have high speed, easily scalable, and should be of legal sound. These features will complement the existing digital asset industry that includes cryptocurrencies like Bitcoin and Stablecoins.