Working Group of Digital Currency Use Case by 6 Central Banks

Working Group of Digital Currency Use Case by 6 Central Banks

Reportedly, an initiative has been taken by six central banks to form a working group with the bank of International Settlements (BIS). The central banks are of Sweden, Canada, Switzerland, the U.K. and Japan and the European Central Bank (ECB) and the BIS. They have already formed the group to share findings and will continue counting the economic, functional and technical design choices. They are here to augment cross-border interoperability of CBDCs. Every member of the group will work closely with the Committee on payments and Market infrastructure.

Potential risks associated with stablecoins laid forecasted by Financial Stability Board (FSB), which is an international body that monitors and makes recommendations about the global financial system.  The workings of the group will be co-chaired by the head of BIS’ Innovation Hub, Jon Cunliffe, who is a senior British civil servant and currently serving as Deputy Governor of the Bank of England for Financial Stability, Benoit Coeure and assisted by senior representatives of other bank members.  Coeure, who chaired a G7 working group investigating the global impact of stablecoins, took over as head of the Innovation Hub with an eye to conducting BIS’ attempts in exploring central bank currencies.

There is an extent supportive of private initiative in this area. The launching of Libra accelerated the central bank research and development into digital currencies. China is reported to be full steam ahead on its own CBDC. It is expected that a digital currency alternative could replace the U.S. dollar as the global reserve currency. On the other hand, the central bank of Thailand is also thinking about their own digital currency project. The initiative that has been taken by seven-member working group will take the distributed ledger technology a way forward because for the first time central banks started collaborating together. So, this initiative can an issue for its rivalries like U.S. dollar and Libra.

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