At the start of 2020, an international working group was formed on behalf of central bank governors from a group of countries to share lessons learned, create a shared view and discuss the way forward for central bank digital currency available to the general public (CBDC) – what we in Sweden call the e-krona.
Apart from the Riksbank, this collaboration on CBDC also included the European Central Bank (ECB) and the central banks of Canada, Japan, Switzerland, the United Kingdom and the United States. The group also collaborates with the BIS Innovation Hub.
The central banks consider that central bank digital currency, available to all in society, could be an important part of central banks’ work in promoting secure and efficient payments and contributing to a smoothly-functioning financial system in an increasingly digitalised world. The central banks are in agreement on three basic principles to guide the development work:
- a central bank digital currency must not weaken the central banks’ ability to conduct monetary policy and promote financial stability
- it must complement cash and central bank reserves
- and it must have attributes that promote innovation and efficiency
Among important characteristics that a CDBC should have, the group mentions that it must be robust and also function during natural disasters and disruptions to the electricity supply and other infrastructure. It must be cheap and simple to use so that everybody can make payments with it. The group also wants the private sector to play an appropriate role that promotes competition and innovation.
However, the decision on when to issue it will be left to each country. Similarly, design and technology are national matters and need to be anchored in the specific conditions of each country. The group also considers that, even if CBDCs should be developed with a national focus, development should consider that CBDCs could also lead to cross-border payments becoming more efficient. Together with the BIS Innovation Hub, the central banks in the group will continue to collaborate in the future by focusing on the technical issues surrounding central bank digital currency.