WASHINGTON—The Federal Reserve is collaborating with seven central banks and the Bank for International Settlements (BIS) to hammer out a framework for digital currency.
The worldwide COVID-19 pandemic has accelerated cashless payments and highlighted the impact of technology on how money is exchanged, Jon Cunliffe, deputy governor at the Bank of England (BoE) and chair of a BIS committee on payments, said in a Reuters report.
The central banks working with the BIS include the European Central Bank, the Swiss National Bank and Bank of Japan. The People’s Bank of China (PBOC) is already testing the renminbi, a digital currency it says will extend the yuan’s worldwide reach, Pymnts.com said.
Cunliffe said he did not think any single approach to a central bank digital currency (CBDC) would end up being the dominating force.
“I don’t think this is a race between central banks,” Cunliffe said. He added that central banks have to be at the forefront of digital money to avoid the private sector filling the void.
Central banks started aggressively stepping up plans for an electronic currency after Facebook announced plans in 2019 for the stablecoin Libra.
A May BIS survey of 66 central banks indicated that 80% are working on CBDCs, Pymnts.com noted.