Central bank digital currencies: foundational principles and core features – Report 1 in a series of collaborations from a group of central banks published by BIS (2020).
“Central banks have been providing trusted money to the public for hundreds of years as part of their public policy objectives. Trusted money is a public good. It offers a common unit of account, store of value and medium of exchange for the sale of goods and services and settlement of financial transactions. Providing cash for public use is an important tool for central banks.
Yet the world is changing. Even before Covid-19, cash use in payments was declining in some advanced economies. Commercially provided, fast and convenient digital payments have grown enormously in volume and diversity. To evolve and pursue their public policy objectives in a digital world, central banks are actively researching the pros and cons of offering a digital currency to the public (a “general purpose” central bank digital currency (CBDC)). Understanding of CBDCs has advanced significantly in the last few years. Published research, policy work and proofs-of-concept from central banks have gone a long way towards establishing the potential benefits and risks.
For the central banks contributing to this report, the common motivation for exploring a general purpose CBDC is its use as a means of payment. Providing cash to the public is a core responsibility of central banks and a public good. All the contributing central banks commit to continue providing cash as long as there is public demand. Yet a CBDC could provide a complementary central bank money to the public, supporting a more resilient and diverse domestic payment system. It might also offer opportunities not possible with cash while supporting innovation.
CBDC issuance and design are sovereign decisions to be made by each jurisdiction. This report is not about if or when to issue a CBDC. Central banks will make that decision for their jurisdictions (in consultation with governments and stakeholders). None of the central banks contributing to this report have reached a decision on whether or not to issue a CBDC. Instead, this report advances the foundational international work by outlining common principles and the key features a CBDC and supporting infrastructure would need in order to contribute to central bank public policy objectives…”