The Bank for International Settlements (BIS) has reaffirmed its support for central bank digital currencies (CBDCs).
In a report titled “CBDCs: an opportunity for the monetary system,” BIS researchers argued that sovereign digital currencies offered “the unique advantages of central bank money.”
According to the report, CBDCs are the embodiment of digital money designed for the public good and are best suited for interfacing with instant retail payment systems.
Indeed, several central banks around the world are experimenting with retail CBDCs with many of these projects examining ways to float a digital companion to their respective fiat currencies.
Detailing a probable retail CBDC architecture, the BIS report put forward the following: “CBDCs are best designed as part of a two-tier system, where the central bank and the private sector each play their respective role,” adding:
“A logical step in their design is to delegate the majority of operational tasks and consumer-facing activities to commercial banks and non-bank PSPs that provide retail services on a competitive level playing field. Meanwhile, the central bank can focus on operating the core of the system.”