One of the Bank of International Settlements’s Innovation Hub (BISIH) priorities for 2021 will be a new proof of concept platform for testing wholesale Central Bank Digital Currencies (CBDCs), the “central bank of central banks” said in a press release on 22 January.
According to the announcement, the BISHI has listed CBDCs as one of six “thematic priorities” for 2021, with the rest being suptech and regtech, open finance, green finance, cybersecurity and next-generation financial market infrastructures. As per the BISHI’s annual work program, the goal of the new platform will be to “explore the feasibility of faster and cheaper cross-border payments” using multiple CBDCs.
In addition to the CBDC testing platform, the BISHI will also work on technological research and prototype of a “tiered retail CBDC distribution architectures”, and on a distributed ledger prototype to issue “tokenized green bonds to retail investors”. The head of BISHI, Benoît Cœuré, commented on the annual work program:
“This work programme shows our commitment to exploring in the most practical ways how best to harness technological change for the benefit of central banks and create public goods to support the global financial system. We look forward to taking on the challenges of the year ahead together with our partner central banks.”
The new CBDC initiatives will be carried out across the three Innovation Hub Centers in Hong Kong, Singapore, and Switzerland, as well as in new centers in Europe and North America planned for this year. The BISIH center in Singapore will focus on developing the wholesale CBDC testing platform , while the Hong Kong center works on the green bond tokenization project. The Hong Kong center has also been tasked with building a bridge to facilitate foreign exchange transactions using CBDCs, and exploring different models for stablecoin issuance.
The Friday press release also announced the launch of a new “Innovation Network”, which will see the 63 members of the BIS share knowledge about CBDC technology projects. The goal of the new program is to help central banks around the world build collaboration around financial technology.