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BIS will test Digital Currency by End of 2020

An executive at the Bank for International Settlements stated recently that the BIS works on a CBDC pilot with the Central Bank of Switzerland.

“By the end of this year, we plan to publish our first wholesale CBDC proof-of-concept with the Swiss central bank,” Benoît Cœuré, the head of the BIS’s Innovation Hub, expressed in a speech at the Shanghai Bund Summit (Cœuré dialed in).

CBDCs are digital currencies held by banks. Hypothetically, they have facilitated cheaper transactions and greater security.

Central bank digital currencies are different from cryptocurrencies so much that they are not decentralized; sometimes, they don’t depend on a blockchain. But then again they are similar so much that they roughly take spur from Bitcoin and distributed ledger technology. And now, about 80% of the world’s top central banks are considering them, and this is according to a January report by the BIS.

“Looking ahead, we plan to build on central banks’ experience with [the] cross-border use of CBDC, including with the [Hong Kong Monetary Authority] and the Bank of Thailand, the Monetary Authority of Singapore and with the Swiss National Bank,” said Cœuré.

Cœuré remarked that this work will “pave the way” for retail forms of CBDCs and inform the other central banks’ design for the CBDCs, and will help work out how the CBDCs will link up with each other.

“This complex technical work is above all directed to practical solutions, rather than conceptual research of recent years,” he said.

Cœuré also noted that China leads the way with its own CBDC, a digital yuan that is on the point of being unrestricted. “Through collaboration, we can learn.”

Cœuré expressed that a CBDC would neither be a “revolution” nor escort in a new age of prosperity nor solve major common issues. In its place, they are a better form of money that will support a more varied payment ecosystem and deliver a more global public good.

Separately, in a speech summit, Fintech director for England Tom Mutton called for collaboration:

“Central Banks need to partner with a broad range of stakeholders given the breadth of issues presented by CBDC,” he noted. “We can’t ‘go it alone’.”

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