Along with the central banks of Norway and Sweden it has teamed up with the Bank for International Settlements (BIS) to study how CBDCs might best be used for international retail and remittance payments. Like several of its peers, the Bank of Israel is hedging its bets. The Bank of Israel’s (BoI) steering committee, which issued its 21-page report on 17 April assessing the viability of a digital shekel, notes that although 90% of the world's central banks are examining CBDCs, only a handful have yet actually issued one. Yet not all countries are converts to the cause.
“EMEs seem to be leading the charge, with mixed success, but advanced economies are following closely behind,” the report reflects. The response to crypto from central banks in both developed economies and emerging market economies (EMEs) is to develop digital payment alternatives via a CBDC. Marion Laboure and Cassidy Ainsworth-Grace, Deutsche Bank Research
“Emerging market economies seem to be leading the charge” Nonetheless, cryptos’ growing popularity could pose a challenge to the monetary sovereignty of the world’s central banks and potentially risk “increasing conflicts between private crypto assets and central banks over monetary control” say Laboure and Ainsworth-Grace. “No decision has been taken to implement the digital pound, but the Bank and Treasury’s assessment is that it is likely to be needed if current trends in payments and money continue.”ĭeutsche Bank Research analysts Marion Laboure and Cassidy Ainsworth-Grace examine the CBDC initiatives of various central banks in “Digital currencies: the ultimate soft power?” their latest white paper of the series The Future of Payments, published on 12 April.Īs flow reported in ‘Digital assets – from exuberance to utility’, both believe that while Bitcoin could emerge as the “North Star” of the cryptocurrency market, many of its peers are driven more by “magical thinking” than practical considerations, having yet to prove they offer any added value. Potential outcomes include the launch of a UK central bank digital currency (CBDC) – a sterling digital currency that would be issued by the BoE for general purpose retail use, said Sir Jon. In a speech given on 17 April, 1 Sir Jon Cunliffe, deputy governor at the Bank of England (BoE) predicted, “If future trends continue, cash use is likely to decline further and cash itself will become less useable in all everyday transactions for example, if internet commerce grows and if merchants increasingly accept only digital payment.”
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