The Bank for International Settlements (BIS), the so-called bank for central banks, rejected the popular narrative that private-sector stablecoin proposals (read: Libra) have been key in spurring the issuance of central bank digital currencies (CBDC).
Instead, the BIS, in a new digital payments chapter of its annual economic report published Wednesday, said central bankers have come around to CBDCs because the tech presents a convenient vessel through which they can shape the future of payments.
“CBDC issuance is not so much a reaction to cryptocurrencies and private sector ‘stablecoin’ proposals, but rather a focused technological effort by central banks to pursue several public policy objectives at once,” the BIS said.
The analysis provides an alternative explanation for the sudden acceleration of CBDC pilots, hirings, studies and working groups since the summer of 2019, which journalists, monetary pundits and central bankers themselves widely attributed to the wake-up call of the Libra stablecoin project.
Read more: Central Banks, Stablecoins and the Looming War of Currencies
It also appears to contradict BIS officials’ own thinking about CBDC. In March 2019, three months before Facebook unveiled the Libra cryptocurrency, BIS chief Agustín Carstens said central banks “are not seeing the value” of CBDCs. By July he had changed his tune, saying CBDC issuance might come “sooner than we think.”
The report itself cites “the rise (and fall) of Bitcoin and its cryptocurrency cousins” and the Facebook-linked Libra as two factors that “propelled payment issues to the top of the policy agenda.”
But the BIS now appears to view the buzz around CBDC issuance as a product of the tech’s promise for monetary policymaking and control. By the BIS’ count, CBDC can assist in: financial inclusion, securing digital payments, increasing payment efficiency and encouraging innovation in the space.
Regardless of the origins of the ongoing CBDC craze, the BIS made clear in its Wednesday report that digital currencies are likely transformative, bringing efficiencies to the wholesale currency space and even more “far-reaching” implications to retail payments.
“CBDCs have the potential to be the next step in the evolution of money,” BIS said.