Central banks discuss the potential of creating their own digital currencies
On Wednesday, Masazumi Wakatabe, deputy governor of the Bank of Japan, said that “It’s quite natural to consider how to make international transactions more convenient”. The directors of six central banks, as well as the Bank for International Settlements (BiS), will hold a meeting in Washington to discuss the potential of creating their own digital currencies, in mid-April, according to Nikkei Asia on Feb 06.
Central banks that make standards will govern how digital currencies are used for international payments between banks. Security measures will be another important topic.
The planned meeting will be the first meeting of the group set up last month amid financial institutions raising concerns about the rise of regulated digital currencies. Most notably are Facebook’s Libra and China’s digital yuan.
In January, the central banks of the United Kingdom, Switzerland, Sweden, Canada and Japan, as well as the European Central Bank, formed a working group to further study the application and feasibility of CBDC’s digital currency.
Top officials of the six banks will prepare their findings on CBDC before leaders meet on the sidelines of an international conference in Washington.
Initiated by countries like Venezuela and the Marshall Islands and fueled by Facebook’s Libra, the competition for CBDC is officially underway.
China leads the study of central bank digital currencies, potentially reshaping the financial system. And the People’s Bank of China has its own digital yuan plan.
That prompted other central banks, including the U.S. The Fed Reserve, beginning to take a more serious look at the possibility, in part to avoid falling behind compared to China if announcing a globally used digital fiat that could compete with the dollar’s international position.
Despite being part of the six central bank alliance, Japan is one step ahead. This Friday, legislators will meet to make a series of proposals to lay the groundwork for digital currencies. Japan is seeking greater cooperation with the United States to control the influence of the Chinese digital currency.
The People’s Bank of China is about to launch pilots for its digital currency
The central bank “is expected” to launch trials of the full digital yuan in Shenzhen and Suzhou. Trials likely include the participation of state-owned partners. These include the “Big Four” commercial banks – the Industrial and Commercial Bank of China, China Construction Bank, Bank of China and the Agricultural Bank of China – and the three telecommunications companies, China Telecom, China Mobile and China Unicom.
The central bank has stepped up its DCEP development efforts in part due to the announcement of the Facebook-led Libra project in June 2019. Libra will most likely be a stablecoin pegged to a basket of fiat currencies and government bonds, although other options may be on the table.
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