A group of some world’s elite central banks are coming together on an initiative to look into digital currencies.
Some banks already have made moves towards the initiative, for instance, the central banks of Britain, Japan, the euro zone, Sweden and Switzerland have grouped up with the Bank for International Settlements (BIS) to assess potential use cases for such currencies.
The matter of central bank digital currencies (CBDC) has been making wave among major institutions since Facebook announced plans last year to introduce a cryptocurrency called libra, which would be tied to a basket of currencies and government debt to hold a stable value.
The Libra project as it is of common knowledge encountered serious regulatory pushback, with central bankers from Federal Reserve Chairman Jerome Powell to European Central Bank Board Member Benoit Coeure warning on the potential risks of libra to global financial stability.
The global central banks on Tuesday issued a statement saying they would form a new group co-chaired by Coeure — who is also head of the BIS’ own initiative on digital currencies — and Bank of England Deputy Governor Jon Cunliffe.
They said, “The group will assess CBDC use cases; economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies.”
China has been racing to issue its own central bank digital currency, but its efforts in the space have so far been light on detail. Beijing is also looking to accelerate the development of blockchain technology, the digital ledger that underpins many cryptocurrencies, including bitcoin.
Meanwhile, former Commodity Futures Trading Commission Chairman J. Christopher Giancarlo recently announced plans to push for a digital version of the dollar. Giancarlo is due to speak on the project at the World Economic Forum in Davos, Switzerland this week.
Marcus Swanepoel, CEO and Co-Founder of Luno while commenting also said, “There are two agendas which will dominate this decade, the need to recognise and act on climate change and the absolute necessity to accept and adopt cryptocurrencies. Global warming is an issue which affects us all and time is running out. The need for crypto is about building a financial services sector which can support all populations and peoples. This has to be faster, more secure and be inclusive rather than exclusive.
“Blockchain and climate change both threaten the status quo and require global leaders to reflect on what we need and want, but this is not a negative. The current global financial sector does not want to lose control and see a decentralised system, so it needs to work with the digital future. Cryptocurrencies will be part of a generational change for people who have grown up with and understand tech. They are the same people who don’t want to see the ice caps melt and wildfires spreading.
“We hope that at Davos there can be conversation and agreement. We know that tech always wins, but to bring in positive sustainable change requires cooperation, from all involved.”
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