The Riksbank, six other central banks and BIS in collaboration on principles for central bank digital currency CBDC
A group of seven central banks together with the Bank for International Settlements (BIS) today published a report identifying the foundational principles necessary for any publicly available CBDCs to help central banks meet their public policy objectives.
The report, Central bank digital currencies: foundational principles and core features, was compiled by the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, Sveriges Riksbank, the Swiss National Bank and the BIS, and highlights three key principles for a CBDC:
- Coexistence with cash and other types of money in a flexible and innovative payment system.
- Any introduction should support wider policy objectives and do no harm to monetary and financial stability.
- Features should promote innovation and efficiency.
Based on these principles, the group has identified the core features of any future CBDC system, which must be:
- Resilient and secure to maintain operational integrity.
- Convenient and available at very low or no cost to end users.
- Underpinned by appropriate standards and a clear legal framework.
- Have an appropriate role for the private sector, as well as promoting competition and innovation.
“A central bank digital currency can be regarded as a natural development of the central banks’ current responsibility, given the rapid digitalisation of society. The central banks contributing to this report are providing an important contribution to this development. We have a common view of the central principles that should guide us in the work on central bank digital currencies and an aim to cooperate,” says First Deputy Governor Cecilia Skingsley.
The group of central banks will continue to work together on CBDCs, without prejudging any decision on whether or not to introduce CBDCs in their jurisdictions.
Further development of CBDCs requires a commitment to practical policy analysis and applied technical experimentation. While this has already started, the speed of innovation in payments and money-related technologies requires the prioritisation of collaborative experimentation.
Future activities will include exploring other open questions around CBDCs and the challenges of cross-border payments, as well as continuing outreach domestically and with other central banks to foster informed dialogue on key issues. Work by the BIS Innovation Hub, which serves the broader central banking community, will contribute to this objective.