Multinational central banks intend to develop digital currency

Article source: Financial Times original title: "Multinational central banks intend to develop digital currency"

In the context of changing times and technological advancement, digitalization has changed the way people communicate, organize, interact, migrate and trade in many fields. With the acceleration of the cashless, digital society, there are signs that the Central Bank Digital Currency (CBDC) is becoming a new area of ​​interest for central banks around the world .

On July 9, the Turkish government added the relevant content of the central bank's issuance of digital currency in its economic roadmap from 2019 to 2023. The 11th development plan proposed by the Turkish President shows that “the digital central bank currency based on blockchain will be implemented”. In addition to the central bank's digital currency, the development plan also lists the blockchains that will be used in the transportation and customs operations. It is reported that Turkish Vice President Oktay submitted the plan to the Parliament and the Budget Committee.

The program points out that public services and management can be improved through emerging technologies such as big data, artificial intelligence and blockchain. In fact, Turkey has been considering issuing a national cryptocurrency for some time. In February 2018, Mohamed Simsek, an economist and then deputy prime minister, said in an interview with the media: "We plan to start our own digital currency work. We attach great importance to digitalization." Statistics Corporation's global consumption in 2019 Surveys show that about 20% of residents in Turkey are cryptocurrency investors. Turkey's per capita cryptocurrency rate is the highest among all surveyed countries.

Similarly, Russian central bank governor Nabiulina said in June that the Russian central bank will one day launch its own digital currency. She believes that the key to CBDC's utility is that technology must ensure "reliability and continuity"; technology must mature, including distributed registry technology.

Previously, she also stated that the Russian central bank will consider using a cryptocurrency backed by gold to facilitate international settlement. The Russian central bank will review the proposal to develop cryptocurrency. However, Nabirina added that the legal currency settlement system within the Eurasian Economic Union is improving, which provides “good momentum”. It is reported that the Russian House of Commons is also moving in the direction of passing cryptocurrency legislation.

In addition, many countries have launched a series of infrastructure projects based on blockchain. For example, Park City, Mayor of Seoul , South Korea announced in May this year that the government will use blockchain technology in its citizenship ID card. Park Won-hyun also said that Seoul already has blockchain-based administrative services, such as mobile electronic voting and car sales.

Iranian media also reported on July 10 that the Iranian central bank governor announced that the Iranian authorities plan to authorize cryptocurrency mining. According to reports, the Iranian government has approved part of an administrative law that will authorize the exploitation of cryptocurrencies in Iran. Prior to this, Iran had a long discussion of the legal status of cryptocurrencies.

The International Monetary Fund (IMF) predicted in a June 27 report that central banks will begin issuing digital currencies in the near future. The report shows that the IMF and the World Bank conducted a survey on financial technology, solicited responses from financial institutions in all member states, and to some extent, based on the 96 responses received.

In general, central banks have different motives for developing CBDCs – although both emerging and developed economies are considering CBDC solutions, the latter’s demand is in addition to cash, Choice; for emerging economies in developing countries, the main role of CBDC is to reduce bank costs and to make it easier for citizens without bank accounts to access financial services.

According to the report, several central banks in different countries are considering implementing some form of CBDC. For example, Uruguay has launched a CBDC pilot project, while the Bahamas, the Eastern Caribbean Monetary Union, Sweden and Ukraine are about to test their systems.

Earlier this year, a report issued by the Bank for International Settlements also showed that 70% of the central banks participating in the survey were participating in (or will be participating in) the work or research of issuing CBDCs, and the number in 2018 increased from 2017. Officials at the Bank of International Settlements have also said that the global central bank may have to issue its own digital currency earlier than expected, and it also supports central banks around the world in their efforts to create a digital version of the national currency.