While the use of cash continues to decline in many advanced economies, the volume and diversity of digital payments have expanded. Central banks are researching the risks and rewards of offering a central bank digital currency (CBDC). This first report in a series of collaborations outlines contributions from the following central banks:
• Bank of Canada
• European Central Bank
• Bank of Japan
• Sveriges Riksbank
• Swiss National Bank
• Bank of England
• Board of Governors Federal Reserve System
• Bank for International Settlements
The common motivation for these central banks to explore a general purpose CBDC is its use as a means of payment. Providing cash to the public is a core responsibility of central banks, and having a CBDC could provide a well-complemented support to sustain a more resilient and diverse payment system.
While this report does not propose whether or not to issue a CBDC, it does outline a common set of principles that would contribute to supporting public policy objectives:
The potential of CBDCs, together with an agreement on common principles and features, means there is considerable scope for future international cooperation, knowledge-sharing, and experimentation on CBDC.
Further areas of work for this group surrounds understanding the potential market structure effects of CBDC, their implications for financial stability, and any potential mitigants. The next stage of CBDC research and development will also emphasise practical policy analysis and applied technical experimentation.
While this report does not propose whether or not to issue a CBDC, it does outline a common set of principles that would contribute to supporting public policy objectives:
- a central bank should not compromise monetary or financial stability by issuing a CBDC
- a CBDC would need to coexist with and complement existing forms of money
- a CBDC should promote innnovation and efficiency
The potential of CBDCs, together with an agreement on common principles and features, means there is considerable scope for future international cooperation, knowledge-sharing, and experimentation on CBDC.
Further areas of work for this group surrounds understanding the potential market structure effects of CBDC, their implications for financial stability, and any potential mitigants. The next stage of CBDC research and development will also emphasise practical policy analysis and applied technical experimentation.
