Benoit Coeureb of the BIS says CBDCs will be needed. Photo: BIS.
“Make no mistake, global stablecoins, DeFi platforms (decentralized finance) and big tech companies will challenge the bank’s models.” who said it was Benoît Coeuré, leader of the BIS Innovation Hub, the Bank for International Settlements, also known as the central bank of central banks.
In a speech on Friday (10) at a forum of Eurofi, an association for debates on European financial issues, Cœuré said that central banks (BCs) see their digital currencies, the CBDCs, as an answer to this scenario.
“Time has passed for BCs to start (studying CBDCs) . “We should roll up our sleeves and speed up our work on CBDC’s meticulous design. Launching CBDCs will take years, while stablecoins and cryptoactives are already here. This makes (the matter) even more urgent”, added Cœuré.
Brazil studies CBDC and tests should start in 2022
Brazil is one of the countries that is already studying the matter and may have a currency around 2024. As on other occasions, last Thursday (9) BC president Roberto Campos Neto indicated advantages of CBDCs for banks . One is that they will be able to issue deposits based on their own deposits at CBDC. Thus, they will be able to access programmable money and work with smart contracts.
“Banks may be authorized to tokenize deposits that will be used in a new intermediation platform, with CBDC’, says his presentation on the subject at Casa das Garças. BC’s schedule provides for proof of concept and an innovation laboratory in 2022, pitos in 2023 and decision-making in 2024.
Central Banks Must Hear What Consumers Want From CBDCs
Until recently, the BIS spoke of CBDCs as a possibility that countries should study. Now make it clear that they will be needed. And, of course, it defends that the issuance of digital coins is the prerogative of BCs because they are “trustworthy and accountable” institutions. Furthermore, they do not move for profit for themselves, but for public policies.
According to the BIS representative, the CBDCs will allow a financial architecture with integration. And at the same time, they will allow for competition and innovation. As well as preserving what he calls democratic currency control.
According to him, the digital currencies of BCs must respond to consumer concerns, such as privacy and security. Furthermore, digital functions that are not available can be developed, for example, programmable cash and micropayments.
An important question about CBDCs, he added, is whether there should be limitations for offshore operations. “The technology opens up design possibilities and the system will be complex.” Thus, these coins need to have features like being easy to use, being low cost, being convertible, having instant offsets and being available all the time.
O BIS has six CBDCs and prototypes proof of concept in progress and this number will grow, he stated. This includes projects with countries in Asia.