US News

Act fast or miss the digital payments boat, BIS tells central banks

© Reuters. FILE PHOTO: The tower of the headquarters of the Bank for International Settlements (BIS) is seen in Basel, Switzerland January 30, 2020. REUTERS/Arnd Wiegmann

By Huw Jones

LONDON (Reuters) – Major central banks should press ahead now with digital currency projects to avoid falling behind comparable private sector payment initiatives that are already taking root, a Bank for International Settlements official said on Friday.

Corporate moves into digital payments, including Facebook (NASDAQ:) with its diem stablecoin, have accelerated since the pandemic, as have contactless card transactions, and central banks are falling behind Big Tech at a time when questions are even being asked about the future of cash in some countries.

“The time has passed for central banks to get going,” said Benoit Coeure, a former European Central Bank official who now heads the BIS Innovation Hub.

“We should roll up our sleeves and accelerate our work on the nitty-gritty of CBDC (digital currency) design. CBDCs will take years to be rolled out, while stablecoins and cryptoassets are already here. This makes it even more urgent to start,” Coeure told a conference.

Unlike a stablecoin – whose price is pegged to a largely unregulated cryptocurrency, fiat money or assets like exchange-traded commodities – a CBDC is a digital version of existing notes and coins.

Central banks in Europe, Britain, the United States have been considering establishing CBDCs, though only the People’s Bank of China has taken concrete steps by launching trials.

Coeure said the European Union was uniquely placed to face the future in that field by building on its fast, open payment system and on strong guarantees provided by its data protection rules.

See also  Argentina bondholder group offer includes Pac-Man defence

In July, a European Central Bank report gave the go ahead for the design and possible launch of a digital version of the euro, a project that Coeure said could take five years.

“A CBDC’s goal is ultimately to preserve the best elements of our current systems while still allowing a safe space for tomorrow’s innovation,” he said.

“To do so, central banks have to act while the current system is still in place – and to act now.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.


Leave a Reply