BIS plans to heighten focus on CBDCs; launches project to monitor stablecoins
The Bank for International Settlements (BIS), also known as the “bank for central banks”, has announced its plans to increase its focus on Central Bank Digital Currencies (CBDCs) in 2023. This move is aimed at improving payment systems through the bank’s Innovation Hub. The bank’s work schedule for this year also includes a new experiment called “Project Pyxtrial” that will enable the systemic monitoring of stablecoins.
Project Pyxtrial will investigate various technological tools that may help supervisors and regulators to build policy frameworks based on integrated data.
The project will develop a platform to monitor the balance sheets of stablecoins and address the issue of asset-liability mismatches that most central banks face.
In its efforts to improve cross-border payments, the BIS will also focus on retail CBDCs such as the two-tiered system called Aurum that was piloted in Hong Kong in July 2022. The bank will experiment with the distribution of a retail CBDC through an open API ecosystem in a joint experiment with the Bank of England, dubbed Rosalind.
As of September 2022, only 11 countries have fully launched a CBDC. In Europe, the BIS has been working with the European Central Bank (ECB) on the development of a CBDC for the eurozone. The ECB has stated that it aims to launch a digital euro by 2025 and is currently undergoing a public consultation on its plans.
In Asia, the BIS has been working with central banks in the region on various CBDC projects. For example, in September 2022, the BIS concluded a pilot for a platform called mBridge that involved central banks from Hong Kong, Thailand, China, and the United Arab Emirates, as well as 20 commercial banks from these countries.
In the Caribbean, countries such as the Bahamas and the Eastern Caribbean Currency Union have already launched their own CBDCs, and the BIS has been working with these countries to support their efforts.
According to recent reports, the adoption of CBDCs is increasing globally as central banks explore the potential benefits of these digital currencies. The involvement of the BIS in the development and implementation of CBDCs has been significant. Apart from its focus on retail CBDCs and monitoring stablecoins through Project Pyxtrial, the BIS has also been actively involved in various pilot projects and experiments.
Overall, the BIS’ involvement in the adoption of CBDCs has been significant and its work in this area reflects the increasing interest in CBDCs among central banks globally. The bank’s focus on CBDCs and payment systems improvements is aimed at improving cross-border payments and creating a more efficient and effective payment system.