The Bank for International Settlements (BIS) has endorsed the development of central bank digital currencies (CBDCs), claiming that they are necessary to modernize banking and prevent ‘Big Tech’ from seizing control of money.
The BIS, which is coordinating many of the world’s central banks’ conversations on digital currencies and is known as the “central bank to the world’s central banks,” issued guidelines on Wednesday on how a CBDC such as a digital dollar, euro, yen, or yuan should look.
As business goes online, at least 56 central banks and monetary authorities, representing almost a fifth of the world’s population, are currently looking at digital currencies, according to its next annual report.
“The train has left the station,” stated BIS’ Benoit Coeure, referring to the BIS’ support for central bank digital currencies. “We’re not getting carried away; we’re just taking a look around.”
The campaign comes as physical cash usage declines around the world, and governments seek to protect their money-printing powers from bitcoin and ‘Big Tech’ initiatives like Facebook-backed Diem, formerly Libra.
Authorities will have to decide whether citizens require digital IDs to use CBDCs or adopt the token-based method used by many cryptocurrencies to keep transactions more anonymous, according to Coeure’s BIS colleague Hyun Song Shin.
The BIS believes the ID system is the “best way to proceed,” according to Shin and Coeure. One reason for this is that it would discourage people from adopting digital currencies from other countries, such as the safe-haven dollar.
Most experts believe that fully functional digital dollars or euros are at least two years away, but establishing global CBDC standards is a very political process that is heating up.