Benoît Cœuré, head of the BIS Innovation Hub, seems to be worried with the accelerating adoption of stablecoins, digital assets, and the incursion of Big Tech into finance.
In the face of those challenges, Mr. Cœuré urged central banks to work faster on their CBDC projects in order to go live as soon as possible.
“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”, he said before the Eurofi Financial Forum in Ljubljana.
In regard to commercial banks’ concerns for customer deposits, he continued: “Central banks are mindful of these concerns and are working on answers. They see banks as part of future CBDC systems. Commercial banks should be more worried about the challenge that they face from global stablecoins, DeFi platforms and big tech firms”.
A quick response from central banks has become a pressing matter since stablecoins and cryptoassets are already out there, being traded and used. As adoption grows into the mainstream, it will be much harder for central banks to roll out their digital currencies successfully.
According to to Benoit Cœuré, the 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.
“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.”
On this news, RTGS founder Nick Odgen commented that 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?”, Mr. Odgen added.