The Bank for International Settlements (BIS) sees an urgent need for central bank digital currencies (CBDC) to modernize finance, Reuters reports.
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The regulator also believes that CBDCs will protect countries from digital currencies' monopoly of big tech companies. Benoît Cœuré, the Head of the BIS Innovation Hub, believes that the digitization train has left the station as 56 central banks are already exploring the creation of digital currencies. Cœuré also claims that without CBDC, digital money will increasingly be dominated by large tech companies as they leverage huge social media user bases.
"That is a place where you do not want to be, where governments do not want to be," he said.
In March this year, Cœuré also said that bitcoin (EXANTE: Bitcoin) failed the test of being a currency since the cryptocurrency cannot work as a payment instrument due to the high volatility. He noted that central banks are looking for an instrument that would provide liquidity, safety, and that "can be used as a commodity in the global payments system."
Earlier in January, the Bank for International Settlements estimated that central banks around the world would likely issue their own CBDCs in the next three years.
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