The historical building of the Bank of England, London, UK
The historical building of the Bank of England, London, UK. Financial Times

Six central banks have created a working group with the Bank of International Settlements (BIS) in order to jointly research central bank digital currencies (CBDC), the Bank of England said in a press release on 21 January.

According to the announcement, the newly formed work group will see the banks, which already have expertise in exploring digital currencies, share their experience and study the potential use cases for CBDCs.

The press release reads:

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“The group will assess CBDC use cases; economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies. It will closely coordinate with the relevant institutions and forums – in particular, the Financial Stability Board and the Committee on Payments and Market Infrastructures (CPMI).”

Participating in the effort are the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank (ECB), the Sveriges Riksbank (Sweden), and the Swiss National Bank. The group will include senior representatives from the aforementioned banks, and will be co-chaired by Jon Cunliffe, a Deputy Governor of the Bank of England and chair of the Committee on Payments and Market Infrastructure, and Benoît Cœuré, head of the BIS Innovation Hub.

The joint venture comes as a no surprise, considering that central banks around the world have already started to actively research, pilot and pursue various forms of digital currencies, including CBDCs. Last December, the Bank of Korea announced it will be appointing specialists to examine how cryptocurrencies, distributed ledgers and CBDCs affect financial stability and security.

The Swiss National Bank, which is a member of the working group, partnered with the SIX Digital Exchange (SDX) last October, with the goal of exploring how CBDCs can be used in the settlement of tokenized assets.

In the meantime, while other central banks are still discussing how good of an idea CBDCs are, the People’s Bank of China is progressing with its development of a digital yuan. This January, the bank reported that it has completed the “top-level” design, and joint testing, of its version of the CBDC.

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