BIS calls on central banks to urgently develop CBDCs to compete with crypto assets – regulation

The head of the Bank of International Settlements (BIS) Innovation Hub, Benoît Cœuré, has called on central banks to respond now to central bank digital currencies (CBDCs) to compete with private sector initiatives, including cryptocurrencies. “CBDCs will take years to roll out, while… crypto assets are already here,” he said.

BIS says central banks need to hurry with CBDCs

Benoît Cœuré, head of the BIS Innovation Hub, spoke about central bank digital currencies (CBDCs) at the Eurofi Financial Forum in Ljubljana on Friday. He called on central banks to urgently develop CBDCs to compete with private sector payment initiatives, including cryptocurrencies.

“Today the financial system is shifting beneath our feet,” he explained. "Big Techs are expanding their presence in retail payments. Stablecoins are knocking on the door, demanding regulatory approval. Decentralized finance (defi) platforms pose a challenge to traditional financial intermediation. They all pose different regulatory questions that require quick and consistent answers."

Claiming that “CBDC will be part of the answer,” he stated: “A well-designed CBDC will be a secure and neutral means of payment and settlement, serving as a common interoperable platform around which the new payments ecosystem can organize.”

The BIS official added: "It will enable an open financial architecture that is integrated while welcoming competition and innovation. And it will preserve democratic control of the currency." He said:

The time for central banks is over. We should roll up our sleeves and accelerate our work on the details of CBDC design. CBDCs will take years to launch, while stablecoins and cryptoassets already exist. This makes the start even more urgent.

Cœuré explained that the BIS Innovation Hub supports central banks in the development of CBDCs. “We already have six CBDC-related proofs of concept and prototypes being developed in our centers, with more to come,” he revealed.

Cœuré added: "Ultimately, the goal of a CBDC is to preserve the best elements of our current systems while providing a safe space for tomorrow's innovations. To do this, central banks must act while the current system is still in place - and act now."

According to the Atlantic Council CBDC tracker 81 central banks are currently investigating their own digital currencies. Of these, five are at the start, 14 are in the pilot phase, 16 are in development and 32 are in research.

Central banks currently exploring CBDCs include the European Central Bank (ECB), which recently announced the official start of a two-year investigation into a digital euro. “After completing the investigation phase, we will decide whether or not to start developing a digital euro,” the bank said.

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