A recent report released by the Bank for International Settlements (BIS) pushed for CBDCs, saying that central bank digital currencies can be a good supplement to a competitive monetary system, and explored CBDC designs that countries can consider adopting. Central banks across countries are exploring digital currency options, including major economies like China, Japan, USA, and Russia.
CBDCs can better capture public interest.
Hyun Song Shin, Economic Adviser and Head of Research of the BIS, in a speech at their recent Annual General Meeting in Basel, said, “digital innovation implies a “triple imperative” for the central bank in its role at the foundation of the monetary system: competition, data privacy and the integrity of the payment system.” Given the rapid digitization of the world, a digital representation of money such as CBDCs can “better capture public interest,” he added. Several governments across countries are exploring the CBDC option also to ward off the competition from decentralized and private digital currencies.
CBDCs should be designed around digital identity.
BIS reinforcing its disdain for decentralized cryptocurrencies, pushed for CBDC designs to be built around digital identity, focusing on data security and privacy. A trusted digital identity approach can stave off illicit activity while at the same time, protect data privacy and facilitate cross-border payments. The international bank wrote in its Annual Economic Report, “Central bank digital currencies are moving from concept to practical design and renew the institution of money in a new form designed for the digital age.” BIS, in its analyses, suggested that the most viable and practical design for CBDCs would entail one that is tied to digital identity.