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More central banks look to issue own digital currencies - BIS

Thu, 23rd Jan 2020 16:15

* 20% say likely to issue own digital currencies in next 6
years

* Eight out of ten central banks looking at issue

* Central banks in emerging markets most advanced

* BOE, BOJ, ECB and others have teamed up to examine tech

By Tom Wilson

LONDON, Jan 23 (Reuters) - A rising number of central banks
are likely to issue their own digital currencies in the next few
years, research by the Bank for International Settlements (BIS)
showed on Thursday, as interest in the technology heats up.

Some 20% of 66 central banks surveyed by the BIS said they
were likely to issue a digital currency within the next six
years, up from around 10% a year earlier. One in ten said they
were likely to do so within the next three years.

In all, 80% of central banks said they were looking at the
technology, up from seven in ten surveyed last year.

As Facebook's efforts to launch its Libra cryptocurrency
pour fuel onto debates over who will control money in the
future, major countries have stepped up the pace at which they
are looking at central bank digital currencies (CBDCs).

CBDCs are traditional money, but in digital form, issued and
governed by a country's central bank. By contrast,
cryptocurrencies such as bitcoin are produced by solving complex
maths puzzles, and governed by disparate online communities
instead of a centralised body.

Five central banks, including those in Japan, Britain and
the euro zone, said on Tuesday they were joining forces to look
at the case for issuing CBDCs. The challenge posed by Libra was
likely to have catalysed the move, a former Bank of Japan
executive told Reuters.

Before Facebook unveiled Libra in June, central banks had
been sanguine about cryptocurrencies, mostly because of their
relatively small markets and limited usage by the public.

But the prospect of Facebook's near-2.5 billion users using
Libra, due for launch this year, has stoked worries about the
impact of a widely-used and privately-run cryptocurrency on
nation states' control over monetary policy.

Still, the BIS found that only around 10% - all from
emerging market economies - have developed pilot projects or
started looking at operational or legal questions surrounding
CBDCs, suggesting that the technology remains some way off
implementation.

"There is no evidence of a widespread or general move to
expand this research into experimentation and pilot
arrangements," it said.

Of the central banks surveyed by the BIS, around a third
were from advanced economies and the remainder from emerging
markets.

Those from emerging economies tend to have a stronger
motivation to issue CBDCs that can act as a substitute for or
complement to bank notes, the BIS said, partly because of
concerns over the efficiency and safety of payments using
traditional cash.

The Hong Kong and Thai central banks said on Wednesday they
had moved closer to using CBDCs to make cross-border payments
more efficient.

(Reporting by Tom Wilson; Editing by Toby Chopra)

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