Bank of England Says Six Central Banks Are Studying Potential Cases for CBDCs

Siamak Masnavi

According to the Bank of England (BoE), the central bank of the United Kingdom, it along with four other national central banks, as well as the Bank for International Settlements (BIS), have created a group to study potential use cases for central bank digital currencies (CBDCs) in the jurisdictions concerned.

The press release issued by the BoE on Tuesday (January 21) says that the bank of England, the Bank of Canada, the European Central Bank, the Sveriges Riksbank and the Swiss National Bank, as well as the Bank for International Settlements (BIS), which "serves as a bank for central banks", have formed a group to "share experience" as they evaluate "CBDC use cases; economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies."

This group will "closely coordinate with the relevant institutions and forums – in particular, the Financial Stability Board and the Committee on Payments and Market Infrastructures (CPMI)."

The two co-chairs of the group are Benoît Cœuré, the Head of the BIS Innovation Hub, and Jon Cunliffe, the Deputy Governor of the BoE and the Chair of the CPMI.

Iqbal V. Gandham, the UK managing director of eToro (the world’s leading social trading platform), offered this statement to CryptoGlobe about the BoE's announcement:

"The creation of a group of central banks to assess the merits of CBDCs (central bank digital currencies) is a welcome move because it means regulators are finally recognising the potential of cryptoassets. It’s interesting to note that the US isn’t represented, and we also know that The People's Bank of China is already considering launching its own CBDC, so you have to wonder what this group hopes to achieve and how long it will take to reach a conclusion.

“I’d urge this group of banks to reach out to the existing cryptoasset sector and get their input, to understand their experience and expertise when assessing the benefits and the challenges of digital coins. After all, Bitcoin has been around for over a decade and it and many other cryptoassets are well-established in the financial system, so there’s no point in reinventing the wheel."

And Bradley Rice, a Senior Associate at Ashurst LLP, a UK-headquartered multinational law firm, had this to say:

"This is another excellent, progressive, yet necessary step from the Bank of England and other central banks. 

"The bank has trialled proof of concepts for digital currency in the past but the technology was not there. We have seen significant advances in blockchain and associated technologies – now might be the right time to try again.

"I cannot see central banks giving up control of monetary policy. But projects like Facebook's Libra and others currently in design might have called that into question. Add into the mix the power and growth of China as a world economy, the rise of other emerging economies and the fight the US will put up to maintain the status of the dollar, then it makes perfect sense for the Bank to take this action.  If it didn't it could become an existential question." 

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