“Trade wars are technology wars”: national digital currencies to limit Big Tech

The Bank for International Settlements has given its full support to the development of central bank digital currencies (CBDCs), saying they are needed to modernize finance and ensure Big Techs don’t take control of money. “The new trade wars are technology wars,” BIS Benoit Coeure explained: “The train left the station. It’s not like we’re getting carried away, we’re just looking around. ”The push comes at a time when the use of physical cash is decreasing globally and authorities are trying to fend off the threat to their money printing powers. which comes from bitcoin and the efforts of Big Tech like Facebook which is in the process of releasing its digital currency Diem, formerly Libra. “Central bank interest in CBDCs comes at a critical time. Several recent developments have posed a number of potential innovations involving digital currencies at the top of the agenda. The first of these is the growing attention received by bitcoin and other cryptocurrencies; the second is the debate over stablecoins; and the third is the entry of large tech companies (big tech ) in payment services and financial services more generally. It is now clear that cryptocurrencies are speculative assets rather than money, and in many cases they are used to facilitate laundering or money, ransomware attacks and other financial crimes. Bitcoin in particular has few attributes of public interest when considering its wasteful energy footprint. The stablecoins try to guarantee credibility by being backed by real currencies. “Dubbed the central bank of the world’s central banks, the BIS is also taking up the first European digital currency experiment: the Swiss National Bank and the Bank of France are in fact about to verify the first cross-border payments in the European Central Bank’s digital currency. The experiment will focus on the wholesale bank-to-bank lending market rather than day-to-day public transactions, but it will be the first time that a digital euro and a digital Swiss franc have been tested. The central bank plays four key roles in pursuing the goals for studying national digital currencies: “The first is to provide the unit of account in the monetary system. From that basic promise, all other promises in the economy follow. Second instead, central banks provide the means to secure the purpose of wholesale payments the central bank is the trusted intermediary that debits the payer’s account and credits the payee’s account. Once the accounts are debited and credited to this way, the payment is final and irrevocable. The third function is to ensure that the payment system works smoothly. To this end, the central bank provides sufficient liquidity so that no bottlenecks hinder the functioning of the payment system. The fourth role of the payment system. central bank is to supervise the integrity of the payment system, while maintaining a level playing field. isore, the central bank imposes requirements on participants to support the functioning of the payment system as a whole. ”Authorities are now being asked to decide whether citizens need digital IDs to use CBDCs or follow a token-based path that many cryptocurrencies use to keep transactions more anonymous. According to BIS, the identification system would be the “best way forward”. Thus, it would prevent people from using digital currencies from countries other than their own, such as the dollar. Most experts think that fully functional digital dollars or euros are still a long way off for at least two years, but establishing global rules around CBDCs is a highly necessary operation.