In a speech today, the head of the Bank for International Settlement’s (BIS) Innovation Hub, Benoît Cœuré, urged a sense of urgency around central bank digital currencies (CBDC). However, he stated there’s a need to move fast but NOT break things, in a twist on Facebook’s mantra.
“The financial system is shifting under our feet,” he said, and when it comes to CBDCs, “the time has passed for central banks to get going.” Instead, central banks need to accelerate their work.
He outlined a list of challenging questions that central banks need to ask, some rather progressive ones such as “should central bank money be used in DeFi rather than private stablecoins?”.
In a brief speech, that wasn’t the only time he mentioned DeFi. Cœuré noted that DeFi platforms would challenge financial intermediation and banks in particular. He highlighted that questionable stablecoin asset backing could be a major issue when used on DeFi platforms because of the risk of contagion.
Cœuré also took the opportunity to highlight six CBDC projects in which the BIS Innovation Hub is involved.
- Project Helvetia with the Swiss National Bank (SNB) exploring a wholesale CBDC
- Project Jura, a wholesale CBDC trial between the SNB and the Banque de France
- Project Arena, another Swiss project which has not yet been publicized
- m-CBDC Bridge project for cross border payments with the central banks of Thailand, Hong Kong, China, UAE
- Project Aurum a retail CBDC project with the Hong Kong Monetary Authority
- Project Dunbar, another type of m-CBDC for cross border payments including the central banks of Singapore, Australia, South Africa and Malaysia