According to information dated 23 June 2021, the Bank for International Settlements (BIS) has given its full support to the development of Central Bank Digital Currencies (CBDC). This decision was motivated, among other things, by the need for a general modernization of finance and payments in the classic sense of the word, but also to prevent the complete takeover of the financial sector by giants from the “Big Tech” sector.
What is the Bank for International Settlements, and why is its opinion important?
The Bank for International Settlements, or BIS for short, is also known as the “central bank of central banks.” This institution was established in 1930 in The Hague, and its main purpose is, as you might guess, to help central banks. Currently, the BIS operates as a joint stock company whose main shareholders are central banks. There are 60 of them in total, including, among others: National Bank of Poland and European Central Bank. Currently, the main task of the BIS is to support central banks in the conduct of monetary policy and help maintain financial stability.
BIS issued an opinion on digital currencies
In a pandemic era where most trade has moved to the online space, many banks have begun to consider the wisdom of bringing digital currency into circulation. Based on an annual report, it was summarized that as many as 56 central banks (or almost as many as 1/5 of all central banks in the world!) are considering it.
There are several reasons for this. First, partly because of the COVID-19 pandemic, but certainly also partly because of the continuous development of new technologies, less and less cash is being used in the world. In highly developed countries, a large part of commerce is conducted simply via the Internet and computer, without leaving home. As a result, payments are also made online.
Second, central banks operating within countries are afraid of “handing over control” of the digital payments sector to technology giants. This is a very real scenario. As an example, just look at the Libra currency created by the Facebook conglomerate. Technology companies have an advantage consisting of the number of users who are registered on social networks.
Most experts agree that digital euros or digital dollars are quite a distant future. For the time being, central banks are only considering the sensibility of introducing such a solution. What will time show? For now, nothing can be said for sure. So far, digital currency has been successfully introduced in one country, namely the Bahamas. This money is known as “Sand Dollar”. Other countries are just experimenting.