BIS called CBDC the basis of the monetary systems of the future

BIS called CBDC the basis of the monetary systems of the future

BIS named CBDC is the basis of future monetary systems

The basis of future innovative monetary systems will be CBDC, not cryptocurrencies with their systemic shortcomings. This conclusion was reached by specialists of the Bank for International Settlements (BIS) in the «Annual economic report».

In their opinion, recent events have revealed a huge gap between the vision of cryptocurrencies and reality. BIS experts noted that the collapse of the TerraUSD stablecoin and its associated LUNA token «highlighted the weakness of the system, which is supported by the sale of coins for speculation».

«It is now becoming clear that cryptocurrencies and DeFi have deeper structural limitations that prevent them from achieving the levels of efficiency, stability, and integrity required for an adequate monetary system. In particular, the cryptoverse lacks a nominal anchor, which it tries unsuccessfully to import via stablecoins», the report says.

BIS experts also pointed out the crypto industry's tendency to fragmentation and the use of centralized intermediaries. Blockchain applications cannot scale without compromising security, as evidenced by their «congestion and excessive fees», experts believe.

According to them, a central bank-based monetary system &#171 ;served the community well».

“However, digital innovation pushes the boundaries of technological possibilities with new demands,” they said.

According to BIS experts, the challenge is to use the useful features of cryptocurrencies, such as programmability , composability and tokenization on a more secure foundation.

«The monetary system of the future must combine new technological capabilities with a superior representation of central bank money at its core&# 187;, they said.

The future payment system should be based on «a tried and true division of roles between a central bank providing the backbone and private entities that carry out customer-related activities».

Central banks will operate wholesale CBDCs based on distributed ledger technology. At retail or «customer» At the level of digital currencies, digital currencies will allow intermediaries to improve interoperability between different platforms, reduce costs and expand access to financial services, according to BIS experts.

They recalled that such interactions using CBDC have been tested in a number of experiments under the auspices of the institution. The BIS innovation hub has implemented Inthanon-LionRock, Dunbar and Jura projects with the participation of several central banks.

Nine out of ten central banks around the world are studying CBDC, BIS experts found out.

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