The Bank for International Settlements (BIS) believes a central bank digital currency (CBDC) based on a digital identity scheme would be the "most promising design for general use." In a recent report, the BIS said these design would "balance" protecting users against the "abuse of personal data."
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The regulator also forecasts that a CBDC based on identity would protect the whole payment system against money laundering.
"From a practical perspective, the BIS says the most promising CBDC design would be one tied to a digital identity, requiring users to identify themselves to access funds," the BIS added.
However, there is till no final decision on design for a CBDC as this requires international cooperation. Meanwhile, Benoît Cœuré, the Head of the BIS Innovation Hub, noted that the digitization train has already 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.
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