The Bank of International Settlements (BIS) has told central banks that they need to prepare for the arrival of CBDCs.
The head of the BIS Innovation Hub, Benoît Cœuré, declared: “Central bank money will have to evolve to be fit for the digital future. We should roll up our sleeves and accelerate our work on the nitty-gritty of CBDC design. CBDCs will take years to be rolled out, while stablecoins and crypto assets are already here. This makes it even more urgent to start.”
Only a week ago BIS confirmed it began work with the central banks of Malaysia, South Africa, Singapore, and Australia in order to test how efficient CBDCs are when it comes to cross-border payments. The European Central Bank has also announced it is working on a two-year investigation into the digital euro.
“Global stablecoins, DeFi platforms, and big tech firms will challenge banks’ models. Stablecoins may develop as closed ecosystems or ‘walled gardens,’ creating fragmentation. With DeFi protocols, any concerns about the assets underlying stablecoins could see contagion spread through a system.”