Global Central Banks Collaborate for Collectively Researching Digital Currencies

As digital currencies continue their penetration in the global financial market, central banks are now making collective efforts on their research and applications.

In the latest development, six central banks - The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Sveriges Riksbank and the Swiss National Bank - together will work with the Bank of International Settlements (BIS) to work and assess the potential use cases of digital currencies.

Each of these six central banks will experimenting their central bank digital currencies (CBDCs) subjected to their respective jurisdictions. The official press release states:

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

Head of the BIS Innovation Hub, Benoît Cœuré will be co-chairing this group along with on Cunliffe, Deputy Governor of the Bank of England and Chair of the CPMI.

The topic of central bank digital currencies gathered a lot of steam in the second-half of 2019 after Facebook announced its Libra cryptocurrency project last June. Facebook’s entry in the cryptocurrency space has really got global governments and regulators thinking on this front.

However, Facebook has been facing a strong regulatory backlash over the last six months. With Facebook being questioned for issues relating user data privacy, the regulators have casted strong doubts whether the social media giant can execute the project of this massive scale.

On the other hand, China has accelerated the developments of its own CBDC, Digital Yaun. The People’s Bank of China is actively working with the government to bring its Digital Yuan in the market.

China has been aggressively pushing projects which can help them reduce the dominance of U.S. Dollar in global trade and commerce.

Even Wall Street banking giants have participated in the digital currency industry. Banks like JPMorgan are creating their own cryptocurrency JPM coin for instant cross-border settlements for its clients.

Currently, crypto leaders from around the globe have gathered at the ongoing World Economic Forum 2020 at Davos, Switzerland. These leaders are expected to speak on matter related to blockchain, stablecoins, and CBDC.