Central bank group BIS is set to lead digital currency push

12 noiembrie 2019

The Board of Directors of the Bank for International Settlements (BIS) on Sunday appointed Benoît Cœuré as Head of the new BIS Innovation Hub, set up to foster international collaboration among central banks on innovative financial technology.

Benoît Cœuré has been picked to head a new unit of the Bank for International Settlements (BIS) charged with producing public alternatives to private digital currency initiatives such as Facebook’s Libra coin.

Mr Cœuré comes to the role from the European Central Bank, where he has been a member of the executive board with oversight of payments systems since January 2012. His eight-year term expires on December 31.

The Basel-based BIS, owned by 60 central banks, will unveil its initiative to tackle private sector monetary and payment innovations. „The Innovation Hub will have unprecedented power to add to the stock of public monetary goods.”, according to Financial Times.

„The Hub’s mandate is to identify, and develop in-depth insights into, critical trends in technology affecting central banking; develop public goods in the technology space geared towards improving the functioning of the global financial system; and serve as a focal point for a network of central bank experts on innovation.”, according to the press release.

The first task facing Mr Cœuré, who starts in January and will serve a five-year term, will be to co-operate with the Swiss National Bank to create a central bank digital currency for wholesale use between banks, safeguarded by so-called distributed ledger technology (DLT).

BIS officials believe central banks should pool their resources to fend off potentially disruptive competition from much better funded private sector competitors.

Facebook’s Libra project, which has lost seven of its founding partners since its announcement in June, is feared to lock users in publicly unaccountable walled-gardens. Though questions remain over the project’s future as it prepares to launch in 2020, the growing popularity of privately issued and internationally distributed stablecoins has prompted the BIS to take action on a joint approach.

What does the BIS Innovation Hub do?

The mandate of the BIS Innovation Hub is to identify and develop in-depth insights into critical trends in financial technology of relevance to central banks, to explore the development of public goods to enhance the functioning of the global financial system, and to serve as a focal point for a network of central bank experts on innovation. It complements the already well established cooperation within the BIS-hosted committees.

The Hub will have multidisciplinary teams located in Hong Kong SAR, Singapore and Switzerland.

Why was the Hub set up?

. Technology-driven innovation in financial services is accelerating, and will have major consequences for global financial systems and central banks.

. The IT revolution has repercussions in multiple locations simultaneously.

. Central banks can achieve economies of scale by working together.

What’s next?

Hub projects and topics will evolve over time, and the BIS has been working to identify areas of work for the Hub that reflect the innovation priorities of the central bank community and which could be scaled up through international cooperation.

„Topics under consideration for the work agenda include central bank digital currencies, global stablecoins, payment innovations, the impact of big tech on financial intermediation, regtech and suptech, fast-paced electronic markets, and digitalisation of trade finance.”, according to BIS.

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