The leading global central bank institution has published new research on central bank digital currencies, noting a major shift in their direction thanks to Libra as well as COVID-19.
In advance of its coming annual report, on June 24 the Bank for International Settlements released a special chapter from that report on digital payments — especially central bank digital currencies, a topic that’s attracted tremendous interest in recent months.
The report encourages central banks to treat CBDCs as their future, saying: “One option at the frontier of policy opportunities is the issuance of CBDCs, which could amount to a sea change.”
A recent shift in favor of CBDCs
The BIS found that there had been a major bullish shift in sentiment for CBDCs since the beginning of this year as measured by speeches referring to them positively or negatively.
Source: Bank for International Settlements
The COVID-19 pandemic has factored into this shift, the report says, citing increased precautionary holdings of cash, commerce moving online, and the fact that “public concerns about viral transmission from cash have risen.”
Given quantitative easing injections all over the world looking to stimulate economies in crisis, the report’s statement that “today the central banks’ role is as important as ever, if not more so” seems especially apt.
Libra, China and the global competition
Facebook’s Libra looms large in this shift.