Central Bank Digital Currencies (CBDC) are becoming very popular amongst countries globally. It seems every day there is a new country popping up to release news that they are either researching or denouncing the need for a CBDC. The latest development shows that by the end of 2020, the Swiss National Bank (SNB) and Bank for International Settlements (BIS) will run its own pilot for a digital currency backed by the central bank.
The sentiments have changed towards the need to research a CBDC in the last year. Benoit Coeure, an executive at BIS, had previously issued cautions, telling users to avoid virtual currencies but his attitude has changed. Sunday, the BIS revealed a plan to test a ‘proof-of-concept' CBDC of their own by the end of the year.
As per Coeure, the proof-of-concept will allow them to experiment with retail CBDC. Furthermore, it will help them to discover connections in the current payment system and oversee its compliance.
BIS also intends to collaborate with more central banks worldwide to test the cross-border efficiency of virtual currencies; Hong Kong Monetary Authority and Bank of Thailand are top of the list, said Ceoure.
The SNB and BIS partnered back in 2019, to learn more about blockchain-based tokens. At the moment, SNB says, “This new form of digital central bank money would be aimed at facilitating the settlement of tokenized assets between financial institutions.”
For the sake of effective banking, BIS and seven central banks published a comprehensive report to express their views that how a digital currency should be designed. They impart that CBDC would function with interoperability to coexist with and to complement the forms of money. As per the authorities, by launching CBDC, the central bank mustn’t compromise on financial stability.