Central banks and BIS have published their first central bank digital currency (CBDC) report laying out key requirements

Seven central banks and the BIS have release a report assessing the feasibility of publicly available central bank digital currency (CBDC). The aim is to help central banks deliver their public policy objectives.

The report outlines base principles and core features of a CBDC, but does not give an opinion on whether to issue digital currencies. Central banks will continue investigating CBDC feasibility without committing to issuance.

The report, Central bank digital currencies: foundational principles and core features, was compiled by the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, Sveriges Riksbank, the Swiss National Bank and the BIS, and highlights three key principles for a CBDC:

• Coexistence with cash and other types of money in a flexible and innovative payment system.
• Any introduction should support wider policy objectives and do no harm to monetary and financial stability.
• Features should promote innovation and efficiency.
  

The group of central banks will continue to work together on CBDCs, without prejudging any decision on whether or not to introduce CBDCs in their jurisdictions.

Based on these principles, the group has identified the core features of any future CBDC system, which must be:

• Resilient and secure to maintain operational integrity.
• Convenient and available at very low or no cost to end users.
• Underpinned by appropriate standards and a clear legal framework.
• Have an appropriate role for the private sector, as well as promoting competition and innovation.
  

Further development of CBDCs requires a commitment to practical policy analysis and applied technical experimentation. While this has already started, the speed of innovation in payments and money-related technologies requires the prioritisation of collaborative experimentation.

Future activities will include exploring other open questions around CBDCs and the challenges of cross-border payments, as well as continuing outreach domestically and with other central banks to foster informed dialogue on key issues. Work by the BIS Innovation Hub, which serves the broader central banking community, will contribute to this objective.