The BIS Committee on Payments and Market Infrastructures and the Markets Committee have published a joint report central bank digital currencies (CBDC). The report sets out the findings of research conducted by the committees into the potential implications of CBDC on payment systems, monetary policy implementation and transmission, and the structure and stability of the financial system.
The findings of the report included:
- Wholesale CBDCs may enhance settlement efficiencies for transactions involving securities and derivatives, when combined with distributed ledger technology
- CBDCs could be a robust and convenient alternative to cash for the general public, in the light of the erosion of cash as a commonly used payment instrument from some jurisdictions. This would however be subject to appropriate provision being made for AML and CTF requirements and well as fitting in with tax and supervisory regimes
- A general purpose CBDC could give rise to higher instability of commercial bank deposit funding, if in times of a stressed economy it resulted in a significant flight towards central banks and away from commercial banks.
The report recommended that central banks and other authorities should continue their broad monitoring of digital innovations and keep the potential effect on their own operations under review. It noted that further research on the potential effects of a CBDC on issues such as interest rates, the structure of intermediation and financial stability would be warranted.