Today the Bank for International Settlements published an advance chapter from its upcoming annual report. The 42-page paper on “the future monetary system” puts significant effort into attempting to dismantle the allure of the cryptocurrency ecosystem. It outlines the legislation needed and its vision for the role of central bank digital currency (CBDC).
In discussing the potential for a wholesale or interbank CBDC, one example provided borrows from the concept of the Regulated Liability Network (RLN) outlined by Citi’s Tony Mclaughlin. This envisions a single permissioned network that is host to central banks, banks and other institutions. Hence a CBDC can exist alongside tokenized bank deposits and tokenized e-money. These currencies can be used for settlement of transactions or delivery versus payment and potentially for cross border payments.
For retail CBDCs the BIS emphasizes the central bank’s role as enabling interoperability between other payment systems and enhancing financial inclusion.
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