- The Bank of International Settlements is working with Switzerland’s central bank on a new crypto project.
- The project is actually a CBDC proof-of-concept that is expected to be completed by the end of the year.
- With the world’s central banks focusing so strongly on CBDCs, BIS decided to join the movement.
The Bank of International Settlements (BIS), also known as the Central Bank of Banks, is teaming up with the central bank of Switzerland on a new project. The project in question is a CBDC pilot, according to a BIS executive, which should be ready by the end of the year.
BIS is working on a CBDC pilot
Central Bank Digital Currency (CBDC) projects are emerging around the world, which has been the case for over a year now. Ever since China announced its own digital yuan, many other countries’ central banks started working on their own digital coins in an attempt to catch up with the eastern nation.
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Now, even the Central Bank of Banks is working on it, with plans to publish its ‘first wholesale CBDC proof-of-concept with the Swiss central bank.’
The announcement of the project came from the head of the BIS’ Innovative Hub, Benoît Cœuré, in a recent speech at the Shanghai Bund Summit.
The summit was attended by many other influential individuals, including Alibaba’s retired founder, Jack Ma.
Details about CBDCs
As some may know, the wholesale CBDC is a central bank digital currency held by banks, which would provide much cheaper transactions and significantly improved security than what traditional financial systems have to offer.
They are different from regular cryptocurrencies in a number of ways. For example, they are managed by central banks, instead of the community, which makes them centralized. Also, in some cases, they don’t need the blockchain in order to operate.
Still, they are similar enough to some crypto to be considered digital currencies. These days, at least 80% of central banks around the world are either testing them, developing them, researching them, or at least considering them.
Like most regular cryptos, CBDCs also have great potential to improve international transactions. Cœuré even noted that the BIS’ work will eventually pave the way for retail CBDCs. The technical work is complex, but hopefully, there will come a day when CBDCs of different banks will be compatible. Still, Cœuré says that people should not expect CBDCs to solve major societal issues or revolutionize the financial industry. They are simply a better form of money to which society can switch in years to come.