The Bank for International Settlements has some interesting thoughts about the future of money. While the BIS does not approve of bitcoin or cryptocurrencies, they have high hopes for CBDCs. The future of the monetary system hangs in the balance, and consumers need to make their voice heard.
BIS Wants To Push For CBDCs
Most people will agree something needs to change in today’s monetary system. However, whether that involves cryptocurrencies, digital assets, CBDCs, or other tools, remains up in the air. If it is up to the bIS, though, there will be a digital representation of central bank money. More specifically, the BIS wants to push for the global adoption of central bank digital currencies or CBDCs.
In a new report, the BIS indicates banks need to combine innovation with safety, stability, openness, efficiency, and accountability. Moreover, the institution takes the time to highlight what they deem to be “deep structural inadequacies” of cryptocurrencies like bitcoin and ethereum. It is no secret the BIS has no love for crypto, and continues to oppose the idea at every turn, despite the growing consumer exposure to these assets.
BIS head of research Hyun Song Shin adds:
“The BIS argues that the future monetary system should be the fusion of new capabilities around the core of trust provided by the central bank. The private sector will provide customer-facing activities with new functions such as the tokenisation of money and financial instruments and instant retail payments through new interfaces. This combination could bring about lower costs, greater financial inclusion, more user control over financial data, improved integrity and seamless cross-border activity, helping to overcome shortcomings in today’s arrangements. Such innovations could open a new chapter in the global monetary system.”
Central bank digital currencies have no proven track record to date. Although a digital representation of central bank money can succeed, there are still many unanswered questions. Moreover, there is no regulation for such currency, like there is little or none for cryptocurrencies. It will be interesting to see how policymakers decide to tackle those essential aspects.