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BIS's Cœuré raises spectre of Big Tech and stablecoins in push for CBDC action

BIS's Cœuré raises spectre of Big Tech and stablecoins in push for CBDC action

Central banks need to accelerate their CBDC work in the face of stablecoins, digital assets and the incursion of Big Tech into finance, says the head of the BIS Innovation Hub, Benoît Cœuré.

While most central banks are investigating CBDCs, Cœuré is urging greater urgency, telling the Eurofi Financial Forum in Ljubljana that "the time has passed for central banks to get going. We should roll up our sleeves and accelerate our work on the nitty-gritty of CBDC design."

During his speech, Cœuré addresses the concerns that commercial banks have about CBDCs and their implications for customer deposits. "Central banks are mindful of these concerns and are working on answers. They see banks as part of future CBDC systems," he says.

Commercial banks should be more worried about the challenge that they face from global stablecoins, DeFi platforms and big tech firms, he warns.

And, while CBDCs will take years to be rolled out, stablecoins and cryptoassets are already here: "This makes it even more urgent to start."

BIS has been recruiting central banks for several CBDC experiments, most recently launching an investigation into their use for international settlements.

Cœuré says that work on CBDCs should keep in mind three things: why consumers would want one and what they would want it to do; how it would meet public policy objectives; and what technology choices to make.

Concludes Cœuré: "A CBDC's goal is ultimately to preserve the best elements of our current systems while still allowing a safe space for tomorrow's innovation. To do so, central banks have to act while the current system is still in place - and to act now."

Comments: (1)

Nick Ogden
Nick Ogden - RTGS.global - London 13 September, 2021, 10:27Be the first to give this comment the thumbs up 0 likes

Retail CBDC's will not operate correctly until the global wholesale market inefficiencies are resolved. This involves moving to a 24x7x365 digital environment at a wholesale level and then incorporating wholesale CBDC's to eradicate interbank credit risk. Remember, this risk was a key issue in the 2008 Global Financial crisis. 

Benoît is correct in his view and sense of urgency. The work that we are doing underpins the BIS vision where central banks and regulators retain their key role in market supervision and financial stability within an efficient digital environment. This new environment allows commercial banks to benefit from risk reduction and potential improved use of CET1 capital. It also enables customer service levels to be delivered, removing the most frequently asked question in banking, where is the money?