BIS head says physical cash still important, even if CBDCs take over (www.blockcast.cc)

As numerous countries across the board navigate their feelings on central bank digital currencies, or CBDCs, Benoît Cœuré of the Bank for International Settlements thinks physical cash will retain its importance. Heading up the BIS’ innovation wing, Cœuré formerly held a position with the European Central Bank on its executive board.

“In the euro area, unlike Sweden or China, demand for banknotes is still strong,” Cœuré said in an interview on Thursday. “Their role is declining as a means of payment, but they remain a means of savings.” He added:

“No one wants to force consumers to choose their payment methods. Diversity is a good thing and it fosters innovation. The goal is to offer choice, which means allowing consumers to continue paying with currency issued by the central bank.”

Cœuré expressed a multitude of points on the CBDC scene globally. He described innovation as a natural part of growth, mentioning other countries’ varying stances and pacing on CBDCs, as well as Facebook’s Libra.

China, in particular, has blazed a trail in the CBDC race, while the United States has taken more of a wait-and-see approach.

CBDCs essentially hold the potential for removing physical cash altogether — a positive or negative outcome, depending on one’s view. Contingent on the country, some regions, such as the U.S., operate largely digitally already. A CBDC could mean a blockchain-based solution. It could also involve banking with the Federal Reserve instead of commercial banks, based on the route the U.S. takes.

“Central bank digital currency is simply the digital equivalent of coins and banknotes — the safest currency there is, issued by a public institution,” Cœuré expressed, adding:

“In the future, you will be able to pay for your coffee in various ways: Obviously with banknotes and coins, which will remain available as long as necessary, but also with bank cards, digital currency issued by the central bank, payment systems like Apple Pay, PayPal or — when an adequate regulatory framework has been decided — with Libra.”

Cœuré even mentioned Bitcoin (BTC) as a viable payment route: “If you want to pay in Bitcoin, why not, if you and the trader understand and assume the risks associated with this active crypto.”

Physical cash holds important properties possibly unavailable in CBDCs, however, such as availability during power outages.

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Author: Refer to Source Cointelegraph By Benjamin Pirus

Swiss central bank and BIS team up for a crypto project (www.blockcast.cc)

• The Bank of International Settlements is working with Switzerland’s central bank on a new crypto project.
• The project is actually a CBDC proof-of-concept that is expected to be completed by the end of the year.
• With the world’s central banks focusing so strongly on CBDCs, BIS decided to join the movement.

The Bank of International Settlements (BIS), also known as the Central Bank of Banks, is teaming up with the central bank of Switzerland on a new project. The project in question is a CBDC pilot, according to a BIS executive, which should be ready by the end of the year.

BIS is working on a CBDC pilot

Central Bank Digital Currency (CBDC) projects are emerging around the world, which has been the case for over a year now. Ever since China announced its own digital yuan, many other countries’ central banks started working on their own digital coins in an attempt to catch up with the eastern nation.

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Now, even the Central Bank of Banks is working on it, with plans to publish its ‘first wholesale CBDC proof-of-concept with the Swiss central bank.’

The announcement of the project came from the head of the BIS’ Innovative Hub, Benoît Cœuré, in a recent speech at the Shanghai Bund Summit.

The summit was attended by many other influential individuals, including Alibaba’s retired founder, Jack Ma.

Details about CBDCs

As some may know, the wholesale CBDC is a central bank digital currency held by banks, which would provide much cheaper transactions and significantly improved security than what traditional financial systems have to offer.

They are different from regular cryptocurrencies in a number of ways. For example, they are managed by central banks, instead of the community, which makes them centralized. Also, in some cases, they don’t need the blockchain in order to operate.

Still, they are similar enough to some crypto to be considered digital currencies. These days, at least 80% of central banks around the world are either testing them, developing them, researching them, or at least considering them.

Like most regular cryptos, CBDCs also have great potential to improve international transactions. Cœuré even noted that the BIS’ work will eventually pave the way for retail CBDCs. The technical work is complex, but hopefully, there will come a day when CBDCs of different banks will be compatible. Still, Cœuré says that people should not expect CBDCs to solve major societal issues or revolutionize the financial industry. They are simply a better form of money to which society can switch in years to come.