CBDC research has been announced as a top priority for the Bank for International Settlements’ Innovation Hub, or BISIH, in 2021. According to its annual work program, BISIH plans to “explore the feasibility of faster and cheaper cross-border payments” using central bank digital currencies. BISIH also stated it would explore prototypes of “tiered retail CBDC distribution architectures” and distributed ledgers to issue “tokenized green bonds to retail investors.” Central banks across countries are in some capacity exploring digital currencies.
The BIS will test the platform in Hong Kong, Singapore, and Switzerland.
The Innovation Hub Centres will drive the BIS initiatives in Hong Kong, Singapore, and Switzerland — which have been established in conjunction with local central banks. The BISIH center in Singapore has been tasked with building an “international settlement platform” on which regulated banks and payment firms can settle transactions using different CBDCs. The Hong Kong center will work on the green bond tokenization project and build a bridge to facilitate foreign exchange transactions using CBDCs and explore different models for stablecoin issuance. The Swiss center has already completed two proofs-of-concept linking existing payment systems to trial settling tokenized assets using wholesale CBDC through its “Project Helvetia” initiative.
Central banks continue to explore digital currencies.
Several major central banks worldwide are now actively researching central bank digital currencies and making real-world testing plans. Though many smaller economies have already launched versions of their national digital currencies, China is the only major one to complete the development and initiating a full-fledged plan to test the digital yuan. As reported earlier, Cayman island launched a national digital currency this year. Countries including Canada, Japan, the Philippines, and many others are actively exploring CBDCs.