Major Central Banks BOE, ECB, BoC, BoJ, BIS, SNB, and Riksbank Join To Assess Digital Currency Use

The world’s major central banks are coming together to assess the development of their own digital currencies, now that their role is being challenged by new technologies and the entry of giants like Facebook, through Libra.

A group of central banks has been formed to “share experience as they assess the potential cases for central bank digital currency in their home jurisdictions,” according to joint statements on Tuesday.

This group will involve BOE, the European Central Bank, Bank of Canada, the Bank of England, the Swiss National Bank, the Riksbank, the Bank of Japan, and the Bank for International Settlements. BOE in a statement,

“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.”

The group will be co-chaired by BOE deputy governor Jon Cunliffe and former-ECB official Benoit Coeure, the current head of the BIS’s innovation hub. Coeure has previously said that he’s “personally pretty sure” that central backed digital currency will be coming in the future.

PBOC and Federal Reserve Absent from the group

The People's Bank of China is absent from the group, which is ready with the digital version of its currency yuan after five years of research.

Another key absence from the group is the Federal Reserve. The Fed has remained far from the concept of CBDC as Treasury Secretary Steven Mnuchin said in December that he and Fed Chairman Jerome Powell see “no need” for digital currency in the new future. But Powell has said the Fed is monitoring the activities of other central banks to look for potential benefits.

Former CFTC Chair, Christopher Giancarlo has partnered with Accenture to create a non-profit digital dollar, which will explore the creation of a US CBDC.

A CBDC to Counter Private Sector’s Advances

While Facebook is facing backlash from the government around the world for its fiat currency backed Libra, it certainly raised the question of whether public authorities would risk getting left behind.

The debate around a CBDC intensified last year with several central banks coming forward with their plans for digital currency.

Governor Mark Carney even laid out a proposal for the overhaul of the global financial system that will replace the dollar as a reserve currency with a Libra-like digital currency.

Under the new leadership of Christine Lagarde, ECB has been already discussing the idea of issuing its own digital currency. Lagarde has long been arguing that central banks need to consider the merits of such currency.