The world’s central banks are actively working on implementing digital currencies as use of physical cash wanes, according to banking experts.
A recent survey by the Bank of International Settlements (BIS) showed 86 percent of the 65 central banks surveyed said that were at least in the early stages of developing a digital currency, with 15 percent moving toward pilot programs, according to CNBC.
The goal of the banks is to create central bank digital currencies (CBDC) that are conceptually akin to physical cash, said Piero Cipollone, deputy governor of the Bank of Italy.
“In an environment where cash is used less and less by both the customer and the merchant because the whole ecosystem is shifting towards (being) digitalized … you want to replace the functionality of cash with something that is digital but is as conceptually as close as possible to cash,” Cipollone told CNBC.
Benoit Coeure, head of the BIS Innovation Hub, told CNBC that coordination among the central banks was essential to implementation.
“CBDCs are a national project, a journey with legal dimensions, and will ultimately be a national decision. But we have an international monetary system, and we don’t want CBDCs to hamper the adjustment in the system via free exchange rates or capital flows,” said Coeure.
Central banks became increasingly concerned about the impact of stablecoins on the banking ecosystem when Facebook’s Libra project, now known as Diem, emerged, according to CNBC.
“At that point central bankers started to realize they were under some threat. So the question became, if we can’t beat them then join them. It was very clearly after Libra was promulgated,” Exante Data strategist Grant Wilson told CNBC.