Six banks have announced that they will work together to assess whether creating central bank digital currencies (CBDCs) is worth it. The group will review use cases, economic, functional and technical design choices, and the sharing of knowledge on emerging technologies.

What has happened?

Six central banks have come together to explore the merits of CBDCs.

What does this mean?

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Sveriges Riksbank and the Swiss National Bank, as well as the Bank for International Settlements (BIS), have created a group to assess the potential cases for CBDCs in their jurisdictions.

The group plans to review CBDCS use cases, economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies.

It will also work togetehr with the Financial Stability Board and the Committee on Payments and Market Infrastructures (CPMI).

Benoît CSuré, Head of the BIS Innovation Hub, and Jon Cunliffe, Deputy Governor of the Bank of England and Chair of the CPMI will chair the group, which will include senior representatives of the banks.

In another development, in an interview with Challenges magazine, ECB President Christine Lagarde said the bank will continue to assess the costs and benefits of issuing a CBDC.

However, central bank involvement should not be an impediment to private initiatives, Lagarde explained.

"The prospect of central bank initiatives should neither discourage nor crowd out private market-led solutions for fast and efficient retail payments in the euro area," she said.

Lagarde said that a CBDC could have major implications for the financial sector and for the transmission of monetary policy.

At the end of last year, the ECB created an expert task force which will work with national central banks to study the feasibility of a euro area CBDC.

In December last year, Lagarde said the ECB was planning to assess the value of CBDCs. She also warned that stablecoins could disrupt the payment landscape and that they will be beneficial only if the risks associated with them are mitigated through effective regulation and oversight.

Next steps

If you want to take advantage of blockchain's huge potential and disruptive impact, while keeping track of ever-developing regulatory and legal requirements, visit our Hogan Lovells Engage Blockchain Toolkit.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.