By Ifaenyi Egede (Nigeria)
According to the Economic Adviser and Head of Research at the Bank of Settlements, has noted that the implementation of the CBDC might be an avenue for Central banks to expand their horizon across the financial sector. The Head of Research further noted that with the launch of the CBDC, banks would be closer to their customers in the society. At the bank’s special chapter of the annual economic report, they discussed various issues but the main issue discussed was the part played by the central banks in the payment system.
According to BIS’ Hyun Song Shin, he said that the nature of payments needs competition to bring out the best in it. Furthermore, she noted that technology might just help Central banks “put the pieces easily together” and also help them to play the part of the operator of the payment system. “We may also expect CBDCs to have an impact on the functioning of the financial system, potentially leading to a much larger footprint of the central bank on the financial system itself.”
CBDC will bring banks closer to the society, Hyun Song Shin says
Noting the help the CBDC will offer, she also said that the CBDC will bring society to the brink of another evolution in the relationship between the banks and the society. Talking on what the similarity between CBDC and Central bank settlement accounts, shin said, “While wholesale CBDCs may be similar to existing central bank settlement accounts, there’s been more discussion on retail CBDCs that give access to claims on the central bank to ordinary users, in electronic form.”
Also read:With the central bank providing access to physical cash to its customers, CBDC provides another change to that aspect entirely. According to Shin, no matter the way the CBDC is designed, there would be a ledger that would always take account of the transactions made by individuals. Shin admitted that the Central bank has every right to be accountable to the owner of a specific CBDC, so there might be challenged when it comes to the safekeeping of personal data.
BIS Innovation Hub planning global reach
Noting the attitude of Central banks towards CBDC since last year, Shin noted that their speeches and reports have been in favor of the new technology. According to the BIS, one reason why they are supporting CBDC is generally because of the activities carried out in the BIS innovation hub. Established in 2019, the BIS Innovation Hub has spread across the world and presently planning on moving to New locations across Europe and North America.
According to the head of the Hub, Benoit Cœure, the Hub will further move into Europe and North America after opening up three Hub centers in Hong Kong, Singapore, and Switzerland. “With this expansion, the Innovation Hub will be well placed to advance work on a broad range of issues of importance to the central banking community, including digital currency and digital payments, cybersecurity, distributed ledger technology, and artificial intelligence. […] This expansion is a testament to the central banking community’s commitment to innovation and cooperation,” Benoit said.
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