Central Banks' digital currencies could be the next step in monetary development, the BIS reports

BlockBeats, the Bank for International Settlements (BIS) says central bank digital currency (CBDC) is the future of money, a new type of digital fiat currency backed by governments.

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Central Banks are well placed to trigger innovative changes in the current payments infrastructure, the Bank for International Settlements has revealed in a new annual economic report.

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Technology in the digital currency space offers opportunities for payment systems. The CENTRAL Bank Development Center combines this innovative technology with the time-tested foundations of central banking. Central Banks have chosen to use these forces for the common good. They could use it as a catalyst between regulators and operators to develop a whole new set of payment systems running on digital currencies.

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The report also describes the advantages and disadvantages of CBDC, such as the need to carefully weigh its benefits against its impact on the functioning of the financial system, such as disintermediation risks, including accelerating bank runs in times of stress and the potential size of central Banks in the financial system.

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To be successful, the BIS report says, CBDC must have some features that are more attractive than cash. CBDC must also be user-friendly, able to resist network attacks and have anti-counterfeiting functions.

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