The Strategist

EU, England, Japan, Switzerland join forces with Bank for International Settlements to tame cryptocurrencies

01/22/2020 - 08:37

The Bank for International Settlements (BIS) announced creation of a joint working group with the central banks of the EU, England, Sweden, Switzerland, Japan and Canada. Within the group, the central banks of these countries and BIS will evaluate “potential cases of using digital currencies of central banks in their jurisdictions”, including “the possibility of their cross-border interaction”.

The Bank of International Settlements officially announced the creation of a joint group on Tuesday, whose functions include promoting international cooperation between central banks and facilitating international settlements. It is reported that the group will "evaluate the potential use of central bank digital currency (CBDC); economic, functional and technical options for such use, including cross-border interaction; and sharing relevant knowledge with emerging technologies. ”

In addition to discussing the potential use of central bank digital currencies, this working group will closely coordinate its activities with other relevant international institutions, in particular the Financial Stability Board and the Committee on Payments and Market Infrastructure. The latter structure deals with security issues and effectiveness of payments, including non-cash. The working group will be led by Benoit Coeuré, a former member of the ECB board, and now the head of the BIS Innovation Center, as well as Jon Cunliffe, deputy head of the Bank of England.

Unlike such common cryptocurrencies as Bitcoin, Etherium and others, the CBDC digital currency will be issued by the central banks themselves.

According to many experts and the BIS representatives, measures to develop appropriate rules for the introduction of CBDC cryptocurrencies were accelerated not only after the rise in popularity of Bitcoin, but also after Facebook’s plans to release its own cryptocurrency Libra.

Back in September, when plans for the release of Libra began to be actively discussed in the financial markets and criticized by regulators, Mr. Coeuré said that the possible release of such cryptocurrency by a large private corporation “should be an alarming call” for central banks, urging the authorities to cooperate more actively in the issue of CBDC.