CBDC or Central Banks Digital Chimera

04 Feb 2020 by Light_of_Valinor

BIS (Bank for International Settlements - interbank regulatory body owned by 60 central banks, which recommends CBs policies) published a report named "Impending arrival - a sequel to the survey on central

bank digital currency" (dated Jan 2020).

This 19-page doc is different from so many similar papers produced by central bankers during the past 2 years (some were reviewed in this group). Almost all of those where time-late attempts of "suits" to understand what the heck is going on and / or what threats crypo-currencies present to "the stability of World's monetary order".

As its title suggests the latest BIS report summarizes efforts of several dozen CBs to implement CDBC in their countries. Basically, despite all that noise, they are going almost nowhere with those projects.

Only 10% of total banks surveyed have entertained wholehearted attempts to play with "blockchain solutions". Among those most notably are Central Bank of the Bahamas and Eastern Caribbean Central Bank :)

Extract: "Some 40% of central banks have progressed from conceptual research to experiments, or proofs-of-concept; and another 10% have developed pilot projects"

All of those "researches" and "pilots" have, of course, very little to do with the decentralized protocols but present itself attempts either to get rid of cash by issuing its cryptographically protected digital analogues (f.e Sweden’s and Uruguay’s central banks) or to use Ripple-like protocols for interbank transactions and settlements.

Reports authors concluded "Some 10% of the central banks surveyed are likely to issue a CBDC for the general public in the short term, representing 20%

of the world’s population."

However, I would not hold my breath for that. The current monetary system is centralized under FRS and (much less) ECB, to the degree that even officially renegade countries' banks (like Russia's or Iran's) are still remain highly integrated into it (f.e through SWIFT and REPO markets).

At the same time, "A Peer-to-Peer Electronic Cash System" main sated objective is to dispose of this old system altogether.

Sure, you can attempt to marry those two antagonists and produce a number of breathing and kicking "chimeras". However, wouldn't it completely change one of them?