The Bank for International Settlements (BIS), the so-called bank for central banks, rejected, in a June 24 report, the popular narrative that the private sector stablecoin proposals (read: Libra) were instrumental in stimulating the issue of Central Bank Digital Currency (CBDC).
On the contrary, the BIS, in a new chapter on digital payments included in its annual economic report, said that central banks have decided to address the issue of CBDCs because this technology has a number of advantages through which it is possible to shape the future. of payments.
A concrete answer beyond speculation
"The issue of CBDC is not so much a reaction to cryptocurrencies and" stablecoin "proposals from the private sector, but rather a targeted technological effort by central banks to simultaneously pursue various public policy objectives," said the BIS.
The analysis provides an alternative explanation to the sudden acceleration of pilot studies, hiring and working groups on CBDC since the summer of 2019, about which journalists, monetary experts and central bankers themselves have given a motivation in response to the advance of the Facebook Libra stablecoin project.
Politics and innovation among the determinants of CBDC development
The current statement also appears to contradict the evolution of BIS officials' thinking about CBDCs. In March 2019, three months before Facebook introduced the Libra cryptocurrency, BIS chief Agustín Carstens said that central banks "don't see the value" of CBDCs.
In July, it had changed its tone, saying that the CBDC issue could arrive "sooner than expected". The June 24 report cites "the rise (and fall) of Bitcoin and its cousins among cryptocurrencies" and Libra linked to Facebook, as two factors that "pushed payment issues to the top of the political agenda" .
But now the BIS appears to be considering the buzz that has arisen around the issue of CBDC as a product of technology for the elaboration and control of monetary policies. According to the BIS analysis, a CBDC can assist in the development of solutions regarding financial inclusion, protection of digital payments, increasing the efficiency of payments and promoting innovation in space.
Regardless of the origins of the current CBDC fashion, the BIS has made clear in its latest report that digital currencies are likely to be transformative, and bring a surge of efficiency in the wholesale currency space and even more "far-reaching" implications on payments to detail. "CBDCs have the potential to be the next step in the evolution of money," said the BIS.
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