Benoit Coeure reveals BIS plan for CBDC research from 2020
How things have changed since spring 2019 when Agustin Carstens, General Manager of the Bank for International Settlements (BIS) issued his latest warning about the need to be cautious when looking at Central Bank (CBDC) digital currencies.
According to the Chinese news source The Paper, the same institution – the central bank for central banks – is now planning its own trial against a CBDC in cooperation with the Swiss central bank.
The proof-of-concept initiative, unveiled by Benoit Coeure, head of the BIS Innovation Hub, at the Bund Summit in Shanghai October 23-25, would run before the end of the year and open a path for experimentation for use cases a retail – ie cash equivalent – CBDC.
This could include how the digital currency could work with existing payment systems, a role in digital identity, and tracking financial compliance, according to the report.
Such use cases would require more work on the blockchain technology that underlies the CBDC, Coeure said.
The BIS will also explore how to facilitate cross-border digital currency payments between central banks such as the Hong Kong Monetary Authority and the Bank of Thailand.
According to Coeure, the BIS Innovation Center is already conducting experiments in Singapore, Switzerland and Hong Kong and plans to expand the work to Germany, France, the UK, Sweden and Canada.
The comments from Coeure, who sat on the board of the European Central Bank (ECB) until last year, come shortly after the BIS and seven central banks published a report setting out the basic principles for national digital currencies.
While many central banks are still publicly saying that they are evaluating the technology, there seems to be a general trend towards adopting national digital currencies in the years to come. A digital euro is very likely, according to ECB leaders, and CBDC trials are planned in Russia, South Korea and Japan.
At the forefront of the movement was the People's Bank of China, which has been in full development for several years and is apparently in the final stages before a digital yuan goes live.