The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, Sveriges Riksbank, the Swiss National Bank and the Bank for International Settlements (BIS), have joined forces to investigate how they can create their own centrally-run digital currencies.
The group will share their experiences and assess the potential cases for central bank digital currency in their home jurisdictions.
Particularly, the group will focus on economic, functional and technical design aspects, especially how a central digital currency can work across borders.
The group has stated that it will work closely with relevant institutions and forums such as the Financial Stability Board and the Committee on Payments and Market Infrastructures.
Benoît Cœuré, head of the BIS Innovation Hub and board member of the European Central Bank, and Jon Cunliffe, deputy governor of the Bank of England and chair of the CPMI, will co-chair the group.
Cœuré is one of the European banking stakeholders who have expressed scepticism regarding Libra, the cryptocurrency project spearheaded by Facebook.
In September, he told the German Bundestag that stablecoins like Libra come attached to both risks and opportunities.
Not only did he warn that privately owned digital currencies could cause concerns for the financial stability and sovereignty of nation states and their central banks, but also that launching them meant having to deal with challenges like money laundering, terrorism financing, consumer and data protection, cyber resilience, tax compliance and fair competition.
That being said, Cœuré also noted that stablecoins could also help minimize volatility risks, reduce the cost and time wastage of cross-border transactions as well as boosting financial inclusion for the world’s underserved population.
The banks in the group are not the only ones looking to launch their own central digital currency. China’s central bank, France’s Banque de France and the Association of German Banks have also argued for or actively taken steps to launch digital money initiatives.
It is not just central banks, banks and tech giants like Facebook that have looked in to launching cryptocurrencies of their own.
Philippine boxer Manny Pacquiao, Wu-Tang Clan rapper Ghostface Killah and Singer Akon are just three celebrities to lead cryptocurrency projects. Akon is famously using hit Akoin to launch Akon City, which he describes as a “real-life Wakanda” in Senegal.
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