Institutional

BIS will support central banks that issue their own digital currencies

July 1, 2019, 7:19AM EDT

The Bank for International Settlements (BIS) will support central banks trying to issue their own digital assets, The Financial Times writes, in a notable U-turn for the bank, which has previously shunned cryptocurrencies. 

According to the FT, central bank digital currencies (CBDC) could give the public direct access to central bank money, which previously has only been available to private sector lenders.

“Many central banks are working on it; we are working on [] supporting them,” BIS general manager Agustín Carstens said. “And it might be that it is sooner than we think that there is a market and we need to be able to provide central bank digital currencies.”

Carstens argued however that there is not yet a clear use-case for CBDCs. 

"There needs to be evidence for demand... and it is not clear that the demand is there yet. Perhaps people can do what they want by using electronic wallets provided by banks or fintech companies. It depends on the development of payment systems," he said.

The general manager also noted how Facebook’s announcement of Libra may contribute to central banks like the Swedish Riksbank speeding up their digital currency plans. Following the announcement of Libra, the BIS reported that Facebook's planned cryptocurrency project could potentially harm the banking sector.

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