The waiting for CBDCs is almost over and the ordeal of the incumbents is about to begin

Perhaps one jurisdiction and a half have actually launched a Central Bank Digital Currency (CBDC). But the second largest economy in the world (China) is now promising to turn its pilot CBDC into a full-fledged digital fiat currency as soon as February 2022. It would be surprising if a member of the G7 – and especially the United States, possessor of the dominant reserve currency of today -did not feel obliged to respond. The Bank for International Settlements (BIS), whose membership encompasses 63 central banks, has followed up its paper on the foundational principles and core features of a CBDC with a further three covering the design of CBDC systems, how users can be recruited to use CBDCs and how central banks can manage the likely impact on financial stability of issuing a CBDC. The infrastructural arm of the BIS, the Committee on Payments and Market Infrastructures (CPMI), is consulting on why issuers of Stablecoins – the original rival to CBDCs, which prompted the surge of activity by central banks since Facebook unveiled Libra in the summer of 2019 – should be subject to its Principles for Financial Market Infrastructures (PFMIs). With Stablecoins now locked in a symbiotic relationship with the emergent Decentralized Finance (DeFi) markets, questions are being asked about how CBDCs will interact not just with Stablecoins but with the crypto-currencies and tokenized assets that are driving the growth of DeFi. Answers are being sought to the potential risks posed by CBDCs to the funding base of the banking industry, the monetary sovereignty of nation-states, the innovative capacity of the private sector and the privacy of citizens. The benefits, in terms of financial inclusion and improvements to the cost, speed and transparency of cross-currency payments, are being trumpeted. At this webinar, Future of Finance returns to a topic that is already established as the most important, exciting and fastest-evolving of official responses to the threats and opportunities presented by the digitization of money and payments. Hosted on Acast. See acast.com/privacy for more information.