Six central banks have created a working group to share central bank digital currency (CBDC) experiences and assess use cases. All six banks already have significant expertise in exploring digital currencies.
The banks are the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank (ECB), the Sveriges Riksbank (Sweden), the Swiss National Bank, as well as the Bank for International Settlements (BIS).
As interesting as it is to see the formation of such a group, inevitably, the omissions are also notable.
Apart from the Bank of Japan, three Asian central banks are not part of the group despite having significant CBDC research experience. They are the People’s Bank of China (PBoC), which is in the advanced stages of preparing a retail digital currency, and the Monetary Authority of Singapore, which has been through seven iterations of its CBDC Project Ubin. Additionally, the Bank of Thailand and its Project Inthanon has been exploring CBDC with CryptoBLK.
The announcement stated that the group would “assess CBDC use cases; economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies.”
Benoît Cœuré, the new Head of the BIS Innovation Hub, will co-chair the group alongside Jon Cunliffe, who is Deputy Governor of the Bank of England and Chair of the BIS Committee on Payments and Market Infrastructures (CPMI). Cœuré recently joined the BIS and was formerly a director at the ECB and the previous CPMI Chair. He is also the chair of the G7 working group on global stablecoins.
Last June’s announcement of Facebook’s Libra accelerated interest in CBDC. There’s a concern that a platform with Facebook’s reach could spread a new currency sufficiently widely to undermine the role of central banks, particularly in countries with unstable currencies. As a result, Libra faces considerable regulatory headwinds.
The Bank of England’s Mark Carney also previously floated the idea of a “synthetic hegemonic currency”, like Libra a digital currency made up of a basket of currencies, but CBDCs. There is no inference that this group might explore such a currency.