Central banks join forces to consider future digital currencies

Central banks considering digital currencies

Central banks join forces to consider future digital currencies

Major central banks are considering issuing their own digital currencies, the Bank of England and the European Central Bank said on Tuesday amid growing debate about the future of money and who controls it..

Central banks in the UK, Eurozone, Japan, Sweden and Switzerland will share their expertise in a new group led by former European Central Bank official Benoit Kourou and backed by the Bank for International Settlements, they said..

Central banks around the world have accelerated the pace of issuing their own digital currencies after Facebook began preparations for the launch of Libra.

Among the major central banks, China has taken the lead in the quest to create its own digitized money, although the details of this project are still scarce.

«The group will evaluate … economic, functional and technical design options, including cross-border compatibility; and sharing knowledge about new technologies», – central banks said in a statement.

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CBDC is traditional money, but in digital form, issued and managed by the country’s central bank. In contrast, cryptocurrencies like bitcoins are created by solving complex math problems and run by disparate online communities rather than a centralized authority..

The common denominator is that cryptocurrencies and CBDCs are based, to varying degrees, on blockchain technology, a digital ledger that allows transactions to be recorded and accessed in real time by multiple parties..

Last year, Bank of England Governor Mark Carney targeted «destabilizing» the role of the US dollar in the global economy and said central banks may have to team up to create their own reserve currency.

Carney said the best solution would be a diversified multipolar financial system that technology could provide..

Central banks join forces to consider future digital currencies

Libra, being developed by Facebook, was the loudest proposed digital currency to date, but it faced many fundamental challenges that it still has to solve, he added..