Bank for International Settlement

6 Central Banks Partner to Form a Working Group with BIS

6 central banks have reportedly formed a digital currency use case working group with the Bank of International Settlements aiming to share the findings as each of them investigates potential cases for Central Bank Digital Currencies (CBDCs).

The group of 6 central banks will be comprised of the central banks of Sweden, Switzerland, the UK, Canada and Japan, as well as the European Central Bank (ECB) and the Bank of International Settlements (BIS). Announced by the seven members on Tuesday, each of the institution will continue evaluating the ‘functional, economic and technical design choices, incorporating cross-border interoperability’ of CBDCs and will also be sharing any findings.

The members too will work closely with the CPMI, which is an international standard-setter for payments as well as clearing, and the FSB, which is a recommendations body for the global financial system, that has warned about the risks associated with stablecoins previously.

The digital currency working group will be co-chaired by Benoît Cœuré, the newly appointed head of BIS’ Innovation Hub, and Jon Cunliffe, the deputy governor of the Bank of England and the CPMI chair. Besides, senior representatives of other bank members too will be included.

Reports say that Benoît Cœuré took over as head of BIS Innovation Hub to lead the organization’s efforts in exploring central bank currencies.

Though widely supportive of private initiatives in this sector, Benoît Cœuré popularly referred bitcoin as ‘the evil spawn of the financial crisis’ later in 2018.

The head of the International Monetary Fund, Christine Lagarde first called on central banks in order to start exploring cryptocurrencies seriously in late 2018. Since that point of time, the prospect of the private currency initiative has boosted the central bank research and development into digital currencies.

This new seven-member working group isn’t the first example of central bankers working hand-in-hand on distributed ledger technology. Since 2016, the ECB as well as the Bank of Japan have worked together for releasing collaborative research reports which investigate how DLT can be integrated into the global financial infrastructure.