CBDC Issuance Is 'Not a Reaction' to Libra, Says Central Bank Body

The Bank for International Settlements appears to contradict its own prior statements in a new digital payments report.

AccessTimeIconJun 25, 2020 at 12:00 p.m. UTC
Updated Sep 14, 2021 at 8:56 a.m. UTC

The Bank for International Settlements (BIS), the so-called bank for central banks, rejected the popular narrative that private-sector stablecoin proposals (read: Libra) have been key in spurring the issuance of central bank digital currencies (CBDC).

Instead, the BIS, in a new digital payments chapter of its annual economic report published Wednesday, said central bankers have come around to CBDCs because the tech presents a convenient vessel through which they can shape the future of payments.

“CBDC issuance is not so much a reaction to cryptocurrencies and private sector ‘stablecoin’ proposals, but rather a focused technological effort by central banks to pursue several public policy objectives at once,” the BIS said.  

The analysis provides an alternative explanation for the sudden acceleration of CBDC pilots, hirings, studies and working groups since the summer of 2019, which journalists, monetary pundits and central bankers themselves widely attributed to the wake-up call of the Libra stablecoin project. 

It also appears to contradict BIS officials’ own thinking about CBDC. In March 2019, three months before Facebook unveiled the Libra cryptocurrency, BIS chief Agustín Carstens said central banks “are not seeing the value” of CBDCs. By July he had changed his tune, saying CBDC issuance might come “sooner than we think.”

The report itself cites “the rise (and fall) of Bitcoin and its cryptocurrency cousins” and the Facebook-linked Libra as two factors that “propelled payment issues to the top of the policy agenda.” 

But the BIS now appears to view the buzz around CBDC issuance as a product of the tech’s promise for monetary policymaking and control. By the BIS’ count, CBDC can assist in: financial inclusion, securing digital payments, increasing payment efficiency and encouraging innovation in the space.

Regardless of the origins of the ongoing CBDC craze, the BIS made clear in its Wednesday report that digital currencies are likely transformative, bringing efficiencies to the wholesale currency space and even more “far-reaching” implications to retail payments.

“CBDCs have the potential to be the next step in the evolution of money,” BIS said.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
First Mover Asia: Bitcoin Holds Above $21K in Weekend Trading; Solana Web3 Phone Faces Long Odds

Ether stays over $1,200; prior blockchain phones have failed because the market has realized their functionalities are already available via apps that can be loaded onto any old phone.

CoinDesk - Unknown
2
CoinDesk - Unknown
Opaque Platforms and Intertwined Protocols Pose Big Risk to Crypto

Second article in a series about risks we’re thinking about during these crypto down days.

CoinDesk - Unknown
3
CoinDesk - Unknown
Putin Weaponizes Inflation

Examining a recent propaganda speech from the Russian leader.

CoinDesk - Unknown
4
CoinDesk - Unknown
Morgan Creek Is Trying to Counter FTX’s BlockFi Bailout, Leaked Call Shows

FTX’s $250 million credit facility offer – if inked as initially proposed – stood to effectively wipe out all BlockFi shareholders, including Morgan Creek Digital, the firm told its investors.

CoinDesk - Unknown